The Role of Regulations and Immigration in Firms' Offshoring Decisions

Abstract:

The growth in both offshoring and immigration are two striking features of the recent rapid pace of economic globalization. This proposal consists of a research project, which will assess the main driving forces behind Danish firms' offshoring decisions in two separate papers. Specifically in the first paper we will study the determinants of firms’ costs associated with the offshoring decision by focusing on the degree of regulations in important branches of firm activity and within the labor market. For the empirical analysis we will use the World Bank cross-country database of business regulations and the Danish registers. In the second paper by using the same registers, we will investigate whether the inflow of low skilled migrant workers in the local labor market reduces the need for firms to offshore or whether it boosts it by providing connections that firms then use to offshoring.