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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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United States International Trade Commission (USITC)

TRADE, OFFSHORING, AND U.S. MULTINATIONAL CORPORATION EMPLOYMENT IN THE U.S. MANUFACTURING SECTOR, 1999–2008 [online 9 January 2013]

Publication No. ID-034

By Samira Salem, Laura Bloodgood, Isaac Wohl, Cathy Jabara and Nathanael Snow, Office of Industries

December 2012

http://www.usitc.gov/publications/332/working_papers/Final_Trade_Offshoring.pdf

[full-text, 57 pages]

ABSTRACT

A decline in U.S. manufacturing jobs over the last several decades has intensified the spotlight on the role

that international trade and offshoring play in determining employment. Despite a growing literature on

the subject, the impact of trade and offshoring on manufacturing sector employment is not clear. This

study uses qualitative and quantitative analysis to investigate the relationship between trade, offshoring,

and U.S. manufacturing employment between 1999 and 2008. As part of the investigation, we examine

whether employment is affected by the level of income in countries that originate imports into the United

States and/or that benefit from offshoring by U.S. companies. Using a dynamic econometric model and

industry-level data, we obtained results that partially support findings in the literature suggesting that

location matters when it comes to offshoring. In our preferred specification, we find that offshoring to

high-income countries is complementary with U.S. employment (U.S. employment in manufacturing is

higher when affiliate employment in high-income countries is higher), while offshoring to low-income

countries has little effect on U.S. employment in the manufacturing sector. With regard to trade, higher

import penetration is associated with lower U.S. manufacturing employment. However, the data do not

permit us to distinguish meaningfully between imports from high-income and low-income countries.

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