The City-Level Effects of Offshoring

This paper uses a city-level computable general equilibrium (CGE) model to examine the impacts of offshoring for three different periods in the US economy for cities that did not lose jobs to firms relocating overseas. We examine offshoring of final retail and merchandising goods in the 1950- 1980 period, manufactured goods (intermediate goods) in the 1970-2000 period, and current service sector and high-skilled jobs. The impacts of offshoring vary considerably over these time periods. Most notably, when offshoring occurs in high-skilled industries such as computer software and bioengineering, the contributions to economic growth will be smaller compared to the retail and manufacturing experiences over the last 60 years. The results also show wage and per household income effects.