Essays on offshoring, innovation and foreign ownership

This thesis consists of three empirical studies that examine the implications of globalization on both firms and workers. Using data from Peru and Spain, it evaluates the effect of offshoring on labour market outcomes, along with the impact of R&D outsourcing and foreign ownership on innovation. Chapter Two evaluates how South-South offshoring, at the occupational level, affects the labour market outcomes in Peru based on the tasks performed by workers. This effect is assessed by building a continuous measure of routine, manual, and abstract intensive tasks, alongside an indicator of occupational exposure using data from the US O*Net and the Eora Global Supply Chain database, respectively. This chapter finds that Peru offshores routine-manual intensive tasks to other southern countries and specialises in routine-cognitive tasks, increasing the wages of formal and informal workers who perform routine intensive tasks. However, this increase is associated with different transitions across occupations and sectors for the formal and informal workers, providing evidence that these two groups of workers respond differently to offshoring. In addition, the results suggest that there is no relationship between South-South offshoring and the transition from formal to informal markets. However, they confirm that informality prevents displaced informal workers from becoming unemployed. Chapter Three examines the causal relationship between R&D outsourcing and the intensive and extensive margin of R&D based on a theoretical model that explains the firm's decision to outsource as well as the interplay between internal and external R&D. To assess the causal impact of R&D outsourcing on the internal and total R&D investment, this chapter employs a combination of matching methods and difference-in-difference (DID) approach with multiple time periods, using data from Spanish firms. Results suggest that R&D outsourcing positively affects the internal and total R&D investment, indicating a lower elasticity of substitution between both inputs of knowledge. However, the findings differ according to the firm's export status and type of outsourcing (Domestic or international). For the extensive margin, this study employs an empirical analysis at the industry level, finding that in industries where R&D outsourcing is more profitable, fewer firms invest in total R&D. Chapter Four assesses the causal effect of foreign ownership on the probability of innovation cooperation using the same data from Spanish firms as Chapter Three. Furthermore, this chapter differentiates the effect of foreign ownership, both in the context of the global financial crisis (GFC) and in regular economic times. This analysis relies on a matching method technique combined with a triple difference-in-difference (DiDiD) approach. The findings indicate that, on average, foreign-acquired firms are less likely to cooperate in innovation with domestic firms compared to non-acquired firms. However, they exhibit a higher propensity to collaborate on innovation with local partners during periods of crisis.