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Does offshore production always result in job exportation? Using firm-level data for Taiwanese multinationals that allow us to avoid reverse causality issues, this paper finds that while increasing offshore production has a negative impact on the demand for domestic manufacturing workers, this is not the case for domestic research and development workers who are often more skilled. The results also suggest that for Taiwan, there is geographical fragmentation of production activities in such a way that more skilled jobs are maintained domestically and less-skilled jobs are exported to other developing countries. These findings confirm the prediction of the knowledge-capital model.