Co-funded with the W.K. Kellogg Foundation
There has been significant controversy about the effects of globalization in general and offshoring in particular. Proponents argue that it contributes to economic growth; critics, that it increases inequality by lowering the relative employment and wages of less-skilled workers. Alan Blinder has characterized offshoring—the movement by firms of production abroad, whether to another firm or to its own affiliates—as potentially “the biggest issue in economics for a generation.” But the effects of offshoring on American workers have been hard to ascertain in the absence of the right kind of data about the number of jobs that are potentially offshorable and about employer practices.
Kyle Handley and Nicholas Bloom will investigate the extent of offshoring activity and its impact on firms and workers. They propose to link detailed data on U.S. establishments over time with international-level data on firm ownership and financial characteristics, in order to construct new measures of offshoring. They will also update existing empirical analyses of the impact of offshoring on employment and wages. By combining census firm-level data on employment, industry and location with transaction-level data on the composition of a firm’s imports and exports with global data on ownership and production networks from BvD Orbis (a commercial database with financial information on over 120 million companies wordlwide), Handley and Bloom will construct firm-level measures of offshoring that overcome some of the limitations of previous research.