Joakim Gullstrand
Dean, Professor
The Internal and External Effects of Offshoring on Job Security
Author
Summary, in English
In this paper, we investigate the effects of offshoring on workers' job security using matched employer-employee data from Sweden. For our observed period (1997-2011), while the share of firms engaged in offshoring fell during the period from around 25% to 22%, offshoring per worker within offshoring firms almost doubled. We make use of this variation to contribute to the literature on several fronts by examining both the internal (i.e., firms' own offshoring activities) and the external (i.e., neighboring firms’ offshoring activities) effects of offshoring on workers' employment spells. To deal with potential endogeneity, we use instruments based on world supply shocks for both the internal and external measures of offshoring. Our results suggest that external offshoring has a greater impact on job security than internal offshoring. In addition, having a university degree, being young, and being new to the job all reduce the risk of a job exit due to increased external offshoring. This result is indicative of a Schumpeterian job restructuring effect of offshoring, where old jobs are replaced by newer ones. Finally, the increased risk of a job exit from external offshoring is limited to workers in small firms that do not offshore themselves, suggesting a higher vulnerability of these firms to local shocks.
Department/s
- Department of Economics
Publishing year
2017
Language
English
Publication/Series
Working Papers
Issue
2017:14
Links
Document type
Working paper
Publisher
Department of Economics, Lund University
Topic
- Economics
Keywords
- offshoring
- heterogeneous firms
- job security
- globalization
- F16
- F66
- J64
Status
Published