Globalization and jobless recoveries

Abstract

Slow rebounds in employment have become a salient feature of recoveries from recessions over the past few decades. During this time, U.S. production has become increasingly globalized. In this paper, I provide evidence that offshoring contributes to slow recoveries in labor markets. Using data from the Current Population Survey, I show that employment in offshorable occupations mimics employment in routine occupations, recovering more slowly than other types of occupations. Additionally, I use data from the Bureau of Economic Analysis on activities of multinationals to show that offshoring contributes directly to this phenomenon. I then provide a theoretical framework that rationalizes these observations in the context of a modified growth model.