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The Impact of Outsourcing to China on Hong Kong's Labor Market

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  • Chang-Tai Hsieh
  • Keong T. Woo
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    Abstract

    We measure the impact of China's decision to open its economy in 1980 on outsourcing from Hong Kong and the relative demand for less-skilled workers. We show that the relative demand for skilled workers in Hong Kong increased at the same time outsourcing to China began to increase. The reallocation of workers from manufacturing to "outsourcing services" can account for 15 percent, and increased utilization of skilled workers within manufacturing industries for 30 percent, of the aggregate relative demand shift. In addition, the rate of skill upgrading has been greater in manufacturing industries that have seen a greater degree of outsourcing to China.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/000282805775014272
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    File URL: http://www.aeaweb.org/aer/data/dec05_data_20050074.zip
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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 95 (2005)
    Issue (Month): 5 (December)
    Pages: 1673-1687

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    Handle: RePEc:aea:aecrev:v:95:y:2005:i:5:p:1673-1687

    Note: DOI: 10.1257/000282805775014272
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    1. Deardorff, Alan V, 2001. "International Provision of Trade Services, Trade, and Fragmentation," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 233-48, May.
    2. Gordon H. Hanson & Robert C. Feenstra, 2001. "Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods," NBER Working Papers 8088, National Bureau of Economic Research, Inc.
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    8. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
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    11. Robert Z Lawrence, 1994. "Trade, Multinationals and Labour," RBA Annual Conference Volume, in: Philip Lowe & Jacqueline Dwyer (ed.), International Intergration of the Australian Economy Reserve Bank of Australia.
    12. Robert Feenstra, 2003. "Integration Of Trade And Disintegration Of Production In The Global Economy," Working Papers 986, University of California, Davis, Department of Economics.
    13. Dixit, Avinash K & Grossman, Gene M, 1982. "Trade and Protection with Multistage Production," Review of Economic Studies, Wiley Blackwell, vol. 49(4), pages 583-94, October.
    14. Ronald W. Jones, 2000. "Globalization and the Theory of Input Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 026210086x, December.
    15. repec:rus:hseeco:121605 is not listed on IDEAS
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