The external effects of offshoring on job security in SMEs

We investigate the effects of offshoring on job security using matched employer-employee data from Sweden. Between 1997 and 2011, share firms fell around 25 to 22% while per worker within almost doubled. use this variation contribute literature by examining neighboring firms’ (external offshoring) separation in small medium-sized enterprises (SMEs). Our results suggest that external has a significant impact SMEs do not offshore themselves. In addition, having university degree, being young, new reduce risk exit due increased offshoring. This result is indicative Schumpeterian job-restructuring effect where old jobs are replaced newer ones. Finally, suggests higher vulnerability these local shocks activities larger firms. Offshoring leads exits (SMEs) themselves, as evidence manufacturing highest for less educated older workers. Manufacturers ever more involved fragmented supply chains they intermediate inputs one another. any decision made manufacturer (replace supplier with foreign one) may have negative workers other be vulnerable because tend their activities, although study uses set Sweden explore medium-size find lead low skill (less educated) Policy makers should aware often-larger through channels related chains.