Multinationals, Offshoring and the Decline of U.S. Manufacturing
We provide new facts about the role of multinationals in the decline in U.S. manufacturing employment between 1993-2011, using a novel microdata panel with firm-level ownership and trade information. Multinational-owned establishments displayed lower employment growth than a narrow control group and accounted for 41% of the aggregate manufacturing employment decline. Further, newly multinational establishments in the U.S. experienced job losses, while their parent firms increased input imports from abroad. We develop a model that rationalizes this behavior and bound a key elasticity with our microdata. The estimates imply that a reduction in the costs of foreign sourcing leads firms to increase imports of intermediates and to reduce U.S. manufacturing employment. Our findings suggest that offshoring by multinationals was a key driver of the observed decline in manufacturing employment.
Christoph E. Boehm & Aaron Flaaen & Nitya Pandalai-Nayar, 2020. "Multinationals, Offshoring, and the Decline of U.S. Manufacturing," Journal of International Economics, vol 127. citation courtesy of