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Downstream offshoring and firm‐level employment

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  • Bruno Merlevede
  • Bernhard Michel
Abstract
When engaging in offshoring, firms import not only intermediates they used to produce in‐house but also intermediates they previously sourced from non‐affiliated domestic suppliers. This leads to a negative demand shock for the latter. We label this demand shock “downstream offshoring” and develop a novel measure capturing its extent for a firm in a given upstream industry. According to our instrumental variables estimations for a rich sample of Belgian manufacturing firms for the period of 1997 to 2007, downstream offshoring has a robust negative effect on employment. Délocalisation en aval et emploi au niveau des entreprises. Dans le cadre de l’internationalisation de leurs processus de production, les entreprises augmentent leurs importations d’inputs intermédiaires pour remplacer non seulement des inputs qu’elles produisent en interne mais aussi des inputs achetés auprès de fournisseurs domestiques non‐affiliés. Cela entraîne un choc de demande négatif pour ces derniers. Nous avons appelé ce choc délocalisation en aval et développé un indicateur permettant de mesurer son importance pour des firmes dans un secteur en amont. Basées sur un large échantillon d’entreprises du secteur manufacturier pour les années 1997–2007 et utilisant des variables instrumentales, nos estimations montrent que les chocs de délocalisation en aval ont un effet négatif robuste sur l’emploi.

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  • Bruno Merlevede & Bernhard Michel, 2020. "Downstream offshoring and firm‐level employment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(1), pages 249-283, February.
    • Handle: RePEc:wly:canjec:v:53:y:2020:i:1:p:249-283
    DOI: 10.1111/caje.12425
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    2. Povilas Lastauskas, 2022. "Lockdown, employment adjustment, and financial frictions," Small Business Economics, Springer, vol. 58(2), pages 919-942, February.
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    4. Zouheir El-Sahli & Joakim Gullstrand & Karin Olofsdotter, 2022. "The external effects of offshoring on job security in SMEs," Small Business Economics, Springer, vol. 59(4), pages 1613-1640, December.

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