The Impact of Immigration on Firm-level Offshoring

William W. Olney, Dario Pozzoli

Research output: Working paperResearch

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Abstract

This paper studies the relationship between immigration and offshoring by examining whether an in ux of foreign workers reduces the need for firms to relocate jobs abroad. We exploit a Danish quasi-natural experiment in which immigrants were randomly allocated to municipalities using a refugee dispersal policy and we use the Danish employer-employee matched data set covering the universe of workers and firms over the period 1995-2011. Our findings show that an exogenous in ux of immigrants into a municipality reduces firm-level offshoring at both the extensive and intensive margins. The fact that immigration and offshoring are substitutes has important policy implications, since restrictions on one may encourage the other. While the multilateral relationship is negative, a subsequent bilateral analysis shows that immigrants have connections in their country of origin that increase the likelihood that firms offshore to that particular foreign country.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School, CBS
Number of pages50
Publication statusPublished - 2018
SeriesWorking Paper / Department of Economics. Copenhagen Business School
Number3-2018

Keywords

  • Immigration
  • Offshoring

Cite this

Olney, W. W., & Pozzoli, D. (2018). The Impact of Immigration on Firm-level Offshoring. Copenhagen Business School, CBS. Working Paper / Department of Economics. Copenhagen Business School, No. 3-2018