The Labor Market Effects of Offshoring by U.S. Multinational Firms

Abstract We use firm-level data on U.S. multinationals to show how offshoring affects domestic employment within and across firms. introduce a new instrument for offshoring, bilateral tax treaties, which reduce the cost of offshore activities. find substantial heterogeneity in effects. A 10% increase affiliate drives 1.3% at parent firm, with smaller effects industry regional levels. In contrast, by vertical declining among nonmultinationals same industry, firms opening affiliates exhibit growth than those expanding existing affiliates.