Search

Working paper No. 282: Do Immigrants Spur Offshoring? Firm-Level Evidence

PublicationWorking paper
Andreas Hatzigeorgiou, Företagandets villkor, Internationell handel, Magnus Lodefalk, Migration, Patrik Karpaty, Richard Kneller
ah_pk_rk_ml_offshoring_migration_282
Download

Abstract

Offshoring is an important aspect of firms’ internationalization. However, offshoring comes at a cost, especially where information or trust is lacking. Immigrant employees could reduce such offshoring costs through their knowledge of their former home countries and via access to foreign networks. We develop a framework of heterogeneous final-good firms to guide our empirical analysis and draw on new employer-employee data for approximately 12,000 Swedish firms during the time period 1998-2007. Our results support the hypothesis that immigrant employees spur offshoring activities by firms through lower offshoring costs. Hiring one additional foreign-born worker can increase offshoring up to three percent on average, with skilled migrants having the strongest effects.

Hatzigeorgiou, A., Karpaty, P., Kneller, R., & Lodefalk, M. (2016). Do Immigrants Spur Offshoring? Firm-Level Evidence. Ratio Working Paper No. 282. Stockholm: Ratio.


Similar content

A Literature Review of the Nexus between Migration and Internationalization
Article (with peer review)Publication
Hatzigeorgiou, A. & Lodefalk, M.
Publication year

2021

Abstract

Protectionism and anti-globalization tides have been rising already before the COVID-19 pandemic, with Brexit and the China-U.S. trade war, as two examples. A continued disruption to global trade, investment and value chains could worsen global development. Economic recovery will require restoring firms’ ability to trade, offshore and invest globally. To achieve this, it will be useful to understand the role of migration for foreign trade, investment and other aspects of internationalization. In this paper we review and discuss over 100 papers published about migrants’ roles on international trade, foreign direct investment and offshoring. Although the evidence suggests that migration facilitates trade and internationalization, we also note substantial gaps and inconsistencies in the existing literature. The aim of this paper is to encourage further research and assist policymakers in their efforts to promote economic recovery including internationalization.

Ratio Working Paper No. 335 International Trade and Labor Market Integration of Immigrants
Working paperPublication
Lodefalk, M., Sjöholm, F. & Tang, A.
Publication year

2020

Published in

Ratio Working Paper

Abstract

We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade. Using granular longitudinal matched employer–employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages.

Show more