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Given the potential impact of automation on jobs, the research will have important implications for policymakers trying to woo industrial operations back home. “A slowdown in globalization doesn’t necessarily imply firms will bring back all of these jobs, as once access to offshore labor is restricted, companies will invest in technology, unless wages drop,” Simintzi says.

“In particular, we show that firms that have access to cheap offshore labor have less incentive to invest in technology at home.”īut as wages go up in a tight labor market, companies will look at accelerating automation in the workplace, according to her striking findings.

“ In my research, we show that the relative price of labor is a key driver of technology adoption by firms,” she says. Politicians have pronounced that multinational companies should bring manufacturing and jobs back home.īut Simintzi, associate professor of finance at UNC Kenan-Flagler Business School, shows in her research that “onshoring” production is more likely to lead to greater firm investment in labor-saving technologies in the current environment because of rapid wage growth in developed economies. Rising geopolitical tensions and disruption to global supply chains caused by COVID-19 have led companies to declare that the era of globalization that is based on outsourcing to cut costs is over.

Carolina Next: Innovations for Public Good ↗Įlena Simintzi has a message for policymakers in the west: The demise of a three-decade-long era of globalization does not necessarily mean companies will bring jobs back home.

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