Firing at Subcontractors? Spillover Employment Effects of Offshoring in Italy

Using firm-level data for Italy, we address the employment consequences of international production offshoring. We concur with previous literature that offshoring firms' individual employment performances are no worse than at matching non-offshoring firms. However, offshoring might impart negative spillover effects on subcontracting firms, and this indirect effect might be felt particularly in Italy's industrial structure (small-sized networked enterprises). To study this, we group firms within their typical subcontracting clusters, identify high-offshoring clusters and compare them with a matching low-offshoring sample. The evidence that employment performances worsen in the productive clusters with high-offshoring supports our conjecture