DP8837 | Offshoring high-skilled jobs: EU multinationals and domestic employment of inventors

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The research activities of multinational firms is increasingly mobile raising concerns about displacement of high-skilled employment in headquarter countries. We estimate of the impact offshoring inventors has on firms' use of inventors at home using within firm variation across industries. We use a instrumental variables to tackle possible endogeneity and identify robust bounds on the estimate. We cannot rule out the possibility that foreign inventors displace home inventors, but our main result suggests that a 10% increase in the number of inventors abroad results in a 1.9% increase in the number of inventors at home.