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Title: Immigration, Offshoring and American Jobs

Citation Type: Working Paper

Publication Year: 2012

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Abstract: How do offshoring and immigration affect the employment of native workers? What kinds of jobs suffer, or benefit, most from the competition created by offshore and immigrant workers? In contrast to the existing literature that has mostly looked at the effects of offshoring and immigrationseparately, we argue that one can gain useful insights by jointly investigating the interactions among native, immigrant and offshore workers. We develop our argument in three steps. First, we present some new facts on 58 U.S. manufacturing industries from 2000 to 2007. Second, we build on Grossman and Rossi-Hansberg (2008) to design a model of task assignment among heterogeneous native, immigrant and offshore workers that fits those facts. Third, we use the model to draw systematic predictions about the effects of immigration and offshoring on native workers and we testthese predictions on the data. We find that, within the manufacturing sector, immigrants do not compete much with natives, as these two groups of workers are relatively specialized in tasks at opposite ends of the skill intensity spectrum. Offshore workers, on the other hand, seem to bespecialized in tasks of intermediate skill intensity. We also find that offshoring has no effect on native employment in the aggregate, while the effect of immigration on native employment is positive. This hints at the presence of a productivity effect" whereby offshoring and immigration improve industry efficiency, thereby creating new jobs.

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Authors: Ottaviano, Gianmarco I.P.; Wright, Greg C.; Peri, Giovanni

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Publication Number: 1147

Institution: Center for Economic Performance

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Publisher Location: London School of Economics

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Migration and Immigration

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