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Gains from Offshoring?

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Gains from Offshoring?

Evidence from U.S. Microdata

Federal Reserve Board,

5 min read
5 take-aways
Audio & text

What's inside?

American companies that transfer production overseas affect employment and wages in US labor markets.

Editorial Rating



  • Analytical
  • Scientific
  • Eye Opening


The effects of international trade and globalization on employment, productivity, output and wages in the manufacturing sector have long been fodder for the media, labor unions, government officials and economists. In the United States, growing income inequality is gaining more and more attention, as are the businesses that relocate their operations overseas. Using new analytical tools, economists Ryan Monarch, Jooyoun Park and Jagadeesh Sivadasan offer fresh insights and draw significant conclusions in this scholarly paper about the impacts of offshoring on the US labor force. The report itself, replete with econometric and statistical analyses, may prove a taxing read for the uninitiated, but getAbstract believes that business strategists and policy makers will find its results thought provoking.


The United States boasted some 17 million manufacturing jobs in 2000, a number that had held steady since 1990. But by 2012, about five million of those jobs had disappeared due, in some measure, to growing international trade and the offshoring of production facilities.

According to past studies, US companies that offshore operations that are vertically integrated with their domestic activities can experience positive impacts on overall profits and output, and if firms share those gains with workers, wages rise...

About the Authors

Ryan Monarch is an economist with the Board of Governors of the Federal Reserve System. Jooyoun Park is an assistant professor of economics at Kent State University. Jagadeesh Sivadasan is an associate professor of business economics at the University of Michigan.

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