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Firm adjustment, employment and sub-contracting

Author

Listed:
  • Edward J. Amadeo
  • João Carlos Scandiuzzi
  • Valéria Pero

Abstract

This article analyses the impact of sub-contracting on the labor market and theinefficiency that may result from it. Sub-contracting is partially associated with the increase inservices employment and the decrease in manufacturing employment in the early 1990s. Thus,sub-contracting may decrease job quality and incentives to human capital accumulation, sinceservices tend to value human capital less than manufacturing and have more informal andunstable labor relations. This scenario may deteriorate if the sub-contracted firms face creditconstraints. Due to the existence of externalities, investment in human capital would be sub--optimal even if contracting firms were willing to invest in the sub-contracted ones. JEL Classification: J23; J81; J01.

Suggested Citation

  • Edward J. Amadeo & João Carlos Scandiuzzi & Valéria Pero, 1996. "Firm adjustment, employment and sub-contracting," Brazilian Journal of Political Economy, Center of Political Economy, vol. 16(1), pages 20-37.
    • Handle: RePEc:ekm:repojs:v:16:y:1996:i:1:p:20-37:id:1189
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    File URL: https://centrodeeconomiapolitica.org/repojs/index.php/journal/article/view/1189/1174
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    More about this item

    Keywords

    Outsourcing; labor demand; working conditions; human capital;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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