Mexico experienced a tremendous expansion of its export-processing maquila sector during the 1990s. At the same time, a … maquiladora program was to increase formal employment, we study how the rapid increase in maquiladora activity has affected labor … market outcomes in Mexico. We develop a heterogeneous firm model with imperfect labor markets that captures salient features …

) can offshore routine tasks to a low-wage host country. The most productive firms self-select into offshoring, and the … impact on welfare in the source country can be positive or negative, depending on the share of firms engaged in offshoring … among entrepreneurs is higher with offshoring than in autarky. All results hold in a model extension with firm-level rent …

The offshoring of production by multinational firms has expanded dramatically in recent decades, increasing these firms … probability. We also show that a firm’s probability of offshoring increases with the share of its employees who are immigrants …

and the offshoring of tasks. At the firm-level, exporting leads to higher wages and employment, while offshoring of … firms restrict employment to keep wages low, resulting in too many firms that are on average too small. Offshoring on the … markets through exporting and through offshoring, and we show that due to monopsonistic competition our model makes sharply …

selling abroad. Because offshoring requires larger sunk costs than domestic sourcing, some firms decide to offshore only when … between the domestic and the foreign market are greater. In turn, offshoring firms sell greater volumes, display less …

. First, services offshoring increases average employment and wages within local labour markets, much more so in the …The study proves evidence of five new empirical facts on the impact of services offshoring on local labour markets … manufacturing industry than in the services one. Second, positive effects are both on firms directly offshoring services and on non-offshoring …

(GOLE). Our main result is that offshoring generates a hump-shaped pattern of employment changes across industries. While … the relocation effect reduces employment in offshoring-intensive industries, labor demand in industries with a high … part, we test the non-monotonic employment effects across industries in response to an offshoring shock by focusing on …