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Technological diffusion, the diffusion of skill and the growth of outsourcing in US manufacturing

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  • Elisabetta Magnani

Abstract

What drives the observed rapid growth of outsourcing in US manufacturing? This article approaches this question by asking whether technological diffusion driven by R&D spillovers is in part responsible for the growth of atypical work arrangements in the USA. Relying on data of technological diffusion since the early 1970s, this study provides some evidence that technological factors may have contributed to the spread of outsourcing. When sample composition effects are accounted for, technological innovation reduces outsourcing in high-tech industries. Furthermore, this study highlights the importance of distinguishing between 'rent' and 'pure knowledge' spillovers. Rent spillovers are positively correlated with outsourcing, whereas pure knowledge spillovers usually decrease the incentive to outsource. Support to the technological diffusion hypothesis is also found, particularly in a sample of high-tech industries after 1980, in which rapid diffusion of IT technologies is notoriously witnessed. Alternative hypotheses are better applied to low-tech industries.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 15 (2006)
Issue (Month): 7 ()
Pages: 617-647

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Handle: RePEc:taf:ecinnt:v:15:y:2006:i:7:p:617-647

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Related research

Keywords: Outsourcing; Technological diffusion; Firm-specific human capital; Market-mediated employment arrangements;

References

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  1. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  2. Lewis Segal & Daniel Sullivan, 1996. "The growth of temporary services work," Working Paper Series, Macroeconomic Issues WP-96-26, Federal Reserve Bank of Chicago.
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  4. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  5. Edward Wolff, 1997. "Spillovers, Linkages and Technical Change," Economic Systems Research, Taylor & Francis Journals, vol. 9(1), pages 9-23.
  6. Fixler, Dennis J. & Siegel, Donald, 1999. "Outsourcing and productivity growth in services," Structural Change and Economic Dynamics, Elsevier, vol. 10(2), pages 177-194, June.
  7. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  8. Bart Verspagen, 1997. "Measuring Intersectoral Technology Spillovers: Estimates from the European and US Patent Office Databases," Economic Systems Research, Taylor & Francis Journals, vol. 9(1), pages 47-65.
  9. Ann Bartel & Saul Lach & Nachum Sicherman, 2005. "Outsourcing and Technological Change," NBER Working Papers 11158, National Bureau of Economic Research, Inc.
  10. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," JCPR Working Papers 153, Northwestern University/University of Chicago Joint Center for Poverty Research.
  11. Daron Acemoglu & Jorn-Steffen Pischke, 1998. "Beyond Becker: Training in Imperfect Labor Markets," NBER Working Papers 6740, National Bureau of Economic Research, Inc.
  12. Stephen Machin & John Van Reenen, 1998. "Technology and changes in skill structure: evidence from seven OECD countries," IFS Working Papers W98/04, Institute for Fiscal Studies.
  13. Hoon, Hian Teck & Phelps, Edmund S, 1992. "Macroeconomic Shocks in a Dynamized Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 82(4), pages 889-900, September.
  14. Bart Los & Bart Verspagen, 2000. "R&D spillovers and productivity: Evidence from U.S. manufacturing microdata," Empirical Economics, Springer, vol. 25(1), pages 127-148.
  15. Rebitzer, James B & Taylor, Lowell J, 1991. "A Model of Dual Labor Markets When Product Demand Is Uncertain," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1373-83, November.
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Cited by:
  1. Luigi Benfratello & Tiziano Razzolini & Alessandro Sembenelli, 2009. "Does ICT Investment Spur or Hamper Offshoring? Empirical Evidence from Microdata," Working papers 5, Former Department of Economics and Public Finance "G. Prato", University of Torino.
  2. Bartel, Ann P. & Lach, Saul & Sicherman, Nachum, 2008. "Outsourcing and Technological Innovations: A Firm-Level Analysis," IZA Discussion Papers 3334, Institute for the Study of Labor (IZA).
  3. Elisabetta Magnani & David Prentice, 2006. "Outsourcing and Unionisation: A tale of misallocated (resistance) resources," Working Papers 2006.03, School of Economics, La Trobe University.
  4. Elisabetta Magnani, 2012. "Vertical disintegration and training: evidence from a matched employer–employee survey," Journal of Productivity Analysis, Springer, vol. 38(2), pages 199-217, October.

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