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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. Ann Bartel & Saul Lach & Nachum Sicherman, 2005. "Outsourcing and Technological Change," NBER Working Papers 11158, National Bureau of Economic Research, Inc.
  2. Machin, S. & Van Reenen, J., 1997. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," Papers, Centre for Economic Performance & Institute of Economics 24, Centre for Economic Performance & Institute of Economics.
  3. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 569-96, September.
  4. Fixler, Dennis J. & Siegel, Donald, 1999. "Outsourcing and productivity growth in services," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 10(2), pages 177-194, June.
  5. 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, American Economic Association, vol. 82(4), pages 889-900, September.
  6. Lewis M. Segal & Daniel G. Sullivan, 1997. "The Growth of Temporary Services Work," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(2), pages 117-136, Spring.
  7. Wolff, E.N., 1996. "Spillovers, Linkages, and Technical Change," Working Papers, C.V. Starr Center for Applied Economics, New York University 96-37, C.V. Starr Center for Applied Economics, New York University.
  8. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, National Bureau of Economic Research, Inc, in: R&D and Productivity: The Econometric Evidence, pages 287-343 National Bureau of Economic Research, Inc.
  9. Bart Los & Bart Verspagen, 2000. "R&D spillovers and productivity: Evidence from U.S. manufacturing microdata," Empirical Economics, Springer, Springer, vol. 25(1), pages 127-148.
  10. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," NBER Working Papers 7557, National Bureau of Economic Research, Inc.
  11. Daron Acemoglu & Joern-Steffen Pischke, 1998. "Beyond Becker: Training in Imperfect Labor Markets," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 98-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 61(3), pages 397-415, July.
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  14. Zvi Griliches & Jacques Mairesse, 1981. "Productivity and R and D at the Firm Level," NBER Working Papers 0826, National Bureau of Economic Research, Inc.
  15. Bart Verspagen, 1997. "Measuring Intersectoral Technology Spillovers: Estimates from the European and US Patent Office Databases," Economic Systems Research, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(1), pages 47-65.
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Citations

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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, Former Department of Economics and Public Finance "G. Prato", University of Torino 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, 2012. "Vertical disintegration and training: evidence from a matched employer–employee survey," Journal of Productivity Analysis, Springer, Springer, vol. 38(2), pages 199-217, October.
  4. Elisabetta Magnani & David Prentice, 2010. "Outsourcing And Unionization: A Tale Of Misallocated (Resistance) Resources," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 48(2), pages 460-482, 04.

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