Intra-Firm Trade and Employment in US Manufacturing

This paper studies the impact of trade within US-headquartered multinational companies
(MNCs) on labour demand for all employees, as well as, for those of high and low skill in US
manufacturing for the period 1995 – 2005. We find strong evidence on the positive and
negative effect of intra-firm exports and imports respectively, on aggregate employment. The
former effect is stronger than the latter. Moreover, we find that demand for low-skilled labour
is negatively associated with intra-firm imports, while unaffected by intra-firm exports. In
contrast, high-skilled labour demand is positively linked to intra-firm exports but unaffected
by intra-firm imports. The last two findings put together, suggest that low-skill intensive
stages of the value-added chain are mostly transferred to the US affiliates abroad, while highskill
intensive ones are mostly kept within the US parents.