International Outsourcing and Wage Rigidity: A Formal Approach and First Empirical Evidence
AbstractInternational Outsourcing effects on labor markets are mostly analyzed within flexible wage settings. Using a modern duality approach, this paper formally investigates differences occurring in industries with low skilled wage rigidity and, for the first time in literature, presents empirical evidence supporting the theoretical findings. Using a logit model to analyze microeconomic German panel data, results show that International Outsourcing significantly increases low skilled unemployment when taking place in industries characterized by low skilled wage rigidity. Thus, in terms of unemployment, not International Outsourcing but inflexible labor market institutions instead should be blamed for harming low skilled labor.
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Bibliographic InfoPaper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 166.
Length: 26 p.
Date of creation: 2009
Date of revision:
International outsourcing; wage rigidity; unemployment;
Other versions of this item:
- Daniel Horgos, 2009. "International Outsourcing and Wage Rigidity: A Formal Approach and First Empirical Evidence," FIW Working Paper series 027, FIW.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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- Kai Daniel Schmid & Ulrike Stein, 2013.
"Explaining Rising Income Inequality in Germany, 1991-2010,"
32-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Kai Daniel Schmid & Ulrike Stein, 2013. "Explaining Rising Income Inequality in Germany, 1991-2010," SOEPpapers on Multidisciplinary Panel Data Research 592, DIW Berlin, The German Socio-Economic Panel (SOEP).
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