Volatility due to offshoring: Theory and evidence

► Employment fluctuations in Mexican offshoring are twice as large as in the U.S. ► A model of international offshoring can explain asymmetric employment volatility. ► The extensive margin of offshoring transmits and amplifies shocks abroad. ► Empirical evidence shows movement in the extensive margin of offshoring. ► Quantitative simulations show only a small movement of this margin is required.