Date & Time:  March 8^th 17h30 (CET)

Speakers: Devaki Ghose (The World Bank)

Register here (Zoom)

Topic:  Offshoring Response to High-Skill Immigration: A Firm-Level Analysis (with Zhiling Wang)

Abstract:
Immigration, by increasing the supply of foreign labor to firms, may change the incentives of firms to offshore. This paper studies the relationship between immigration and offshoring by examining a policy change in the Netherlands in 2012 that made it easier for firms to employ high-skilled workers from non-EU countries. Using confidential employer-employee matched microdata from the Netherlands, we show that firms in high-skill industries respond by both employing a higher share of non-EU immigrants and reducing the total amount of offshoring to non-EU countries. The results also hold for the extensive margin of offshoring, that is, some firms that were offshoring to non-EU countries stopped offshoring to these countries after the 2012 policy change. We find evidence that non-EU immigrant workers have a different skill-set that complement the skills of native and EU workers but can substitute for offshoring to non-EU countries.