The impact of globalization on domestic employment

ABSTRACT

Immigrants and offshore workers become important disturbing factors of domestic employment in the globalized economy. In this study we build a model with this feature to test how the three groups of workers in the labour force interact using a panel data of 155 countries over the period 1990–2015. We find that while immigrants replaced native workers (especially highly skilled ones), offshore workers who produce intermediate input imports do not. The productivity effect of offshoring is stronger for developed economies while the substitution effect of immigration is stronger for developing countries. Furthermore, the productivity effects of immigration and offshoring are stronger when governments impose less restrictions on international trade and domestic labour market.

KEYWORDS:

• Immigration
• offshoring
• intermediate input imports
• domestic employment
• skill-bias effect

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The employment Includes “working” employees, i.e. those working for at least one hour in a job; An employee who is “absent from work” due to temporary absence or work schedule (e.g. shift, flexitime, and overtime).

² The employment Includes “working” employees, i.e. those working for at least one hour in a job; An employee who is “absent from work” due to temporary absence or work schedule (e.g. shift, flexitime, and overtime).

³ Because the shares must sum to 1, the immigrant and offshore worker shares are collinear, and so we follow Ottaviano, Peri, and Wright (2013), and then estimate their effects separately (as the sole regressors in separate regressions)..

⁴ Data from OECD DIOC database，http://www.oecd.org/els/mig/dioc.htm

Additional information

Funding

Funding from the National Social Science Foundation of China grant #19ZDA068.