Table 9 shows the region-level results, with OLS estimates in columns 1 and 2 and IV estimates in columns 3 and 4. As with the aggregate industry-level results, the relationship between offshoring and employment is positive, and the IV estimates are smaller than the OLS results. The estimate in column 4 implies that a metro area whose industries experience on average a 10% increase in affiliate employment exhibit a 0.17% increase in metro-area employment. While this is a modest positive effect, it is larger in magnitude than the industry-level results in table 6, suggesting the possibility of cross-industry spillovers between industries directly affected by offshoring and other industries in the region that are indirectly affected by changes in local economic conditions.

Table 9.

U.S. Metro-Area-Level Analysis: The Effect of Offshore Employment on U.S. Regional Employment

Dependent Variable: Log Regional Employment—$ln(Lmt)$
(1)(2)(3)(4)
SpecificationOLSOLSIVIV
regional log affiliate 0.035*** 0.033*** 0.018*** 0.017***
employment: ($lnMmt$(0.008) (0.008) (0.004) (0.004)
$ln(GDPus+GDPd)$  −0.756**  −0.326**
(0.343)  (0.152)
$ln(GDPus-GDPd)2$  0.365**  0.158**
(0.173)  (0.077)
$ln(SkillDifference)$  0.209  0.094
(0.129)  (0.057)
$ln(TradeCosts)$  0.058  0.022
(0.060)  (0.026)
BIT  0.077  0.030
(0.289)  (0.127)
FTA  0.010  0.003
(0.091)  (0.040)
Exchange Rate  −0.0009  −0.0004
(0.001)  (0.000)
Industry FE YES YES YES YES
Year FE YES YES YES YES
$N$ 6,080 6,080 6,080 6,080
$R$-squared 0.7312 0.7377 0.7308 0.7374
First-Stage $F$-Statistic – – 165.96 171.84
Endogenous Test $p$-Value – – 0.0205 0.0249
Dependent Variable: Log Regional Employment—$ln(Lmt)$
(1)(2)(3)(4)
SpecificationOLSOLSIVIV
regional log affiliate 0.035*** 0.033*** 0.018*** 0.017***
employment: ($lnMmt$(0.008) (0.008) (0.004) (0.004)
$ln(GDPus+GDPd)$  −0.756**  −0.326**
(0.343)  (0.152)
$ln(GDPus-GDPd)2$  0.365**  0.158**
(0.173)  (0.077)
$ln(SkillDifference)$  0.209  0.094
(0.129)  (0.057)
$ln(TradeCosts)$  0.058  0.022
(0.060)  (0.026)
BIT  0.077  0.030
(0.289)  (0.127)
FTA  0.010  0.003
(0.091)  (0.040)
Exchange Rate  −0.0009  −0.0004
(0.001)  (0.000)
Industry FE YES YES YES YES
Year FE YES YES YES YES
$N$ 6,080 6,080 6,080 6,080
$R$-squared 0.7312 0.7377 0.7308 0.7374
First-Stage $F$-Statistic – – 165.96 171.84
Endogenous Test $p$-Value – – 0.0205 0.0249

Documents the effects of BTT-induced changes in foreign-affiliate employment on domestic employment at the region level. First-stage $F$-statistics are large for all IV specifications, though the relevant $F$-statistics for weak-instrument concerns appear in columns 2 and 5 of table 4 (see text for discussion). In all IV specifications, the equality of OLS and IV is rejected. Sample covers 1987 to 2007. Standard errors clustered by parent firm and year are in parentheses. Significant at $*$10%, **5%, and ***1%.

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