Presented by: Kim Ruhl (University of Wisconsin Madison)
In this talk we show how offshore profit shifting by U.S. multinational enterprises affects several key measures of the U.S. economy. Profits shifted out of the United States grew rapidly from the mid-1990s to 2010 and have since waned. From 1982–2016, on average, 37 percent of income attributed to U.S. direct investment abroad is reattributable to the United States. We find that adjusting for profit shifting shrinks the trade deficit, decreases the return on U.S. foreign direct investment abroad, boosts productivity growth rates in the late 1990s and early 2000s, and lowers labour’s share of income.
Kim Ruhl is a Professor of Economics at the University of Wisconsin-Madison, where he holds the Mary Sue and Mike Shannon Distinguished Chair in Economics. He is also a Research Associate at the National Bureau of Economic Research and a Special Sworn Employee of the Bureau of Economic Analysis. His research focuses on policy issues broadly related to international economics. His recent work studies the effects of corporate tax policy on the incentives for multinational companies to hold profit abroad and the aggregate impacts of international supply chain disruptions. In addition to his work on multinational companies, and has written extensively on the issues facing firms in foreign markets and on the barriers that keep firms from exporting. He has published in leading academic journals including the Journal of Political Economy and the Review of Economic Studies. He is currently an associate editor at The Review of Economic Dynamics. His research has been supported by several grants from the National Science Foundation.