Abstract

How does a firm’s foreign direct investment (FDI) in a low-wage country change its onshore task demand in a high-wage country? Is the shift more intensive for jobs that have been designated offshorable by previous literature? We address these questions using a matched difference-in-differences
(DiD) approach of German firms that have similar propensities to Conduct FDI in the Czech Republic. Our novel matching procedure draws on post-lasso logit estimates and shows that high task intensities of managing, administration, and labor legislation play a major role in firms engaging in international expansion. The outcomes of the DiD estimation are that after acquiring a foreign affiliate, multinational enterprises (MNEs) increase intensities of typical headquarters activities such as managing, analyzing, and negotiating relative to non-MNEs. We also find sector-specific decreases, such as the reduction of typical production tasks (monitoring, producing, measuring) in manufacturing MNEs or typical Service tasks (informing, medical, repairing) in service MNEs. Using established classifications, we find that the occupations associated with this downturn are not necessarily declared offshorable.