This paper analyzes the labor market effects of offshoring in a high-wage home country and how these effects crucially depend on (1) Job complexity and (2) The characteristics of the destination country. It thereby links several sources: rich administrative data on individuals and plants in the German manufacturing industries, information on a job's task bundle, and the evolution of imported inputs from low- or high-wage destinations, which are represented by Eastern and Western Europe, respectively. Offshoring to these origins has opposing effects on German wages with respect to the relative task complexity of jobs: While offshoring to the West puts pressure on the wages of complex jobs and increases the wages of simple jobs, offshoring to the East entails the opposite effect. The overall effect adds up to a 4.2 percent increase in wages for jobs with high complexity, while low-complexity jobs see a 3.9 percent decrease in wages.

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In this paper, we revisit questions about the onshore employment effects of firms that conduct foreign direct investment (FDI) in countries with substantially lower average wages. Our results derive from the use of rich administrative records on the universe of employees in German multinational enterprises (MNEs) that were active in the Czech Republic in 2010. Compared with former studies, the unique data set in this study includes a much higher fraction of small‐ and medium‐sized firms and leads to strikingly different results for service MNEs. Applying coarsened exact matching for firms and an event‐study design, we show that the domestic employment growth of MNEs decreases relative to that of non‐MNEs and that the affected workers are those with low or medium educational attainment in the manufacturing sector and with medium or high educational attainment in the service sector. Regarding workers’ tasks, our results do not show that FDI affects routine jobs beyond a worker's skill level.