Offshoring and skill-upgrading in French manufacturing

Author(s)
Juan Carluccio, Alejandro Cunat, Harald Fadinger, Christian Fons-Rosen
Abstract

Using French manufacturing firm-level data for the years 1996–2007, we uncover a novel set of stylized facts about offshoring behavior: (i) Low-productivity firms (“non-importers”) obtain most of their inputs domestically. (ii) Medium-productivity firms offshore skill-intensive inputs to skill-abundant countries and are more labor intensive in their domestic production than non-importers. (iii) Higher-productivity firms additionally offshore labor-intensive inputs to labor-abundant countries and are more skill intensive than non-importers. We develop a model in which heterogeneous firms, subject to fixed costs, can offshore intermediate inputs of different skill intensities to countries with different skill abundance. This leads to endogenous within-industry variation in domestic skill intensities. We provide econometric evidence supporting the factor-proportions channel through which reductions in offshoring costs to labor-abundant countries have significantly increased firm-level skill intensities of French manufacturers.

Organisation(s)
Department of Economics
External organisation(s)
Universität Mannheim, Foundation Banque de France, University of Surrey, University Pompeu Fabra
Journal
Journal of International Economics
Volume
118
Pages
138-159
ISSN
0022-1996
DOI
https://doi.org/10.1016/j.jinteco.2019.01.001
Publication date
05-2019
Peer reviewed
Yes
Austrian Fields of Science 2012
Foreign trade
Keywords
Portal url
https://ucris.univie.ac.at/portal/en/publications/offshoring-and-skillupgrading-in-french-manufacturing(dcaed9e4-29e1-4ec0-b93c-f3c05f28f91f).html