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Outsourcing and the Demand for Low-skilled Labour in German Manufacturing: New Evidence

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  • Ingo Geishecker
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    Abstract

    This paper analyses how international outsourcing has affected the relative demand for low skilled workers in Germany during the 1990s. In contrast to previous empirical work, the single elements of the input-output-matrix are used to disentangle international outsourcing and trade in final goods more accurately. The main finding is that during the 1990s international outsourcing had a significant negative impact on the relative demand for low-skilled workers, explaining between 19% and 24% of the overall decline in the relative demand for low-skilled labour.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38648.de/dp313.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 313.

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    Length: 20 p.
    Date of creation: 2002
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp313

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    Keywords: international trade; outsourcing; skill-bias; labour demand;

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    References

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    1. Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1245-1279, November.
    2. Anderton, Bob & Brenton, Paul, 1999. "Outsourcing and Low-Skilled Workers in the UK," Bulletin of Economic Research, Wiley Blackwell, vol. 51(4), pages 267-85, October.
    3. Markus Diehl, 1999. "The Impact of International Outsourcing on the Skill Structure of Employment: Empirical Evidence from German Manufacturing Industries," Kiel Working Papers 946, Kiel Institute for the World Economy.
    4. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
    5. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November.
    6. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, Elsevier, vol. 54(1), pages 75-96, June.
    7. Falk, Martin & Koebel, Bertrand M., 2000. "Outsourcing of services, imported materials and the demand for heterogeneous labour : an application of a generalised box-cox function," ZEW Discussion Papers 00-51, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Jose Campa & Linda S. Goldberg, 1997. "The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries," NBER Working Papers 5919, National Bureau of Economic Research, Inc.
    9. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Investment, Outsourcing and Relative Wages," NBER Working Papers 5121, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Andzelika Lorentowicz & Dalia Marin & Alexander Raubold, 2005. "Is Human Capital Losing from Outsourcing? Evidence for Austria and Poland," CESifo Working Paper Series 1616, CESifo Group Munich.
    2. Eiichi Tomiura, 2004. "Foreign outsourcing and firm-level characteristics: evidence from Japanese manufacturers," Hi-Stat Discussion Paper Series, Institute of Economic Research, Hitotsubashi University d04-64, Institute of Economic Research, Hitotsubashi University.
    3. Gorg, Holger & Hanley, Aoife, 2005. "Labour demand effects of international outsourcing: Evidence from plant-level data," International Review of Economics & Finance, Elsevier, Elsevier, vol. 14(3), pages 365-376.
    4. Yiping Zhu, 2008. "Globalisation, Employment, and Wage Rate: What Does Literature Tell Us?," IMK Working Paper 07-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    5. Carsten Ochsen & Heinz Welsch, 2005. "Technology, trade, and income distribution in West Germany: A factor-share analysis, 1976-1994," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 321-345, November.
    6. Geishecker, Ingo & Görg, Holger, 2004. "Winners and Losers: Fragmentation, Trade and Wages Revisited," IZA Discussion Papers 982, Institute for the Study of Labor (IZA).
    7. Michael Knogler & Volkhart Vincentz, 2005. "Auswirkungen der EU-Osterweiterung auf die Arbeitsmärkte der neuen Mitgliedstaaten und der EU-15, insbesondere Deutschland," Working Papers, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) 257, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).

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