We use firm-level data on U.S. multinationals to show how offshoring affects domestic employment within and across firms. We introduce a new instrument for offshoring, bilateral tax treaties, which reduce the cost of offshore activities. We find substantial heterogeneity in effects. A 10% increase in affiliate employment drives a 1.3% increase in employment at the U.S. parent firm, with smaller effects at the industry and regional levels. In contrast, offshoring by vertical multinationals drives declining employment among nonmultinationals in the same industry, and firms opening new affiliates exhibit smaller domestic employment growth than those expanding existing affiliates.

Many markets exhibit price dispersion across suppliers of observationally identical goods. Statistical agencies typically assume this dispersion reflects unobserved quality, so standard price indexes do not incorporate price declines when buyers substitute toward lower-price suppliers. We show that long-run price differences across suppliers can be used to infer unobserved quality differences and propose an index that accommodates quality-adjusted price dispersion. Using transaction-level data on contract semiconductor manufacturing, we document substantial quality-adjusted price dispersion and confirm that a standard index is biased above our proposed index.