By: Ann E. Harrison, Margaret S. McMillan and Clair Null Presenters: Emma, Ben, Roy, and Cyntia

To resolve uncertainty in regards to jobs in the US, due to multinational companies outsourcing employment to third world countries GOAL OF THE STUDY HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

Debate regarding increased unemployment in the US due to outsourcing Local reallocation vs Outsourcing BACKGROUND HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

Bureau of Economic Analysis (BEA) Firm level data on employment, wages, net income and investment from Classification Data 1.Standard Industrial Classification (SIC) Studied from North American Industrial Classification System (NAICS) Began in 1997 DATA AND METHODS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

Industry level data helps bypass firm level data issues, such as: Effect of entry and exit of firms in different countries The size of each firm being weighted equally Consumer demand going between several different firms DATA AND METHODS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

3 million jobs in manufacturing removed from US market 0.5 to 0.75 million jobs gained in low income affiliate countries Employment transfer possibly due to low wage costs in affiliate countries KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

Main industries outsourcing manufacturing jobs include: Computers Electronics Transportation Machinery Chemical KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

Service industries have a positive correlation between low income affiliate countries and parent company country Employment in the service industries increased by 4 million employees in the US, compared to 3 million jobs lost in manufacturing industries KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

Real wages rise in high income countries & decrease in low income countries However, labour cost’s share of income has fallen in all of the US, low income countries, and high- income countries Possibly due to technological change which allows exchange of capital for labour KEY RESULTS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL. 2007

POLICY IMPLICATIONS HARRISON, ANN E., MARGARET S. MCMILLAN AND CLAIR NULL Main policy which can be implemented is a requirement for parent companies to hire a certain percentage of employees within their home country This will likely result in a strong effect in manufacturing industries, as most jobs are outsourced from this industry