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Winners and Losers: Fragmentation, Trade and Wages Revisited

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  • Geishecker, Ingo

    ()
    (University of Göttingen)

  • Görg, Holger

    ()
    (Kiel Institute for the World Economy)

Abstract

Our paper investigates the link between outsourcing and wages utilising a large household panel and combining it with industry level information on industries’ outsourcing activities from input-output tables. By doing so we can arguably overcome the potential endogeneity bias as well as other shortcomings that affect industry level studies. We find that fragmentation has had a marked impact on wages. Distinguishing three skill categories we find evidence that outsourcing reduced the real wage for workers in the lowest skill categories; this result is robust to a number of different specifications and definitions of outsourcing. Furthermore we find some evidence that high-skilled workers experienced increased wages due to fragmentation.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 982.

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Length: 30 pages
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:iza:izadps:dp982

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Keywords: wages; fragmentation; trade; outsourcing; skills;

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References

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Cited by:
  1. Polgár, Éva Katalin & Wörz, Julia, 2010. "Trade with central and eastern Europe: Is it really a threat to wages in the west?," Working Paper Series, European Central Bank 1244, European Central Bank.
  2. Ogloblin, C, 2004. "Global Outsourcing of Human Capital and the Incidence of Unemployment in the United States," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 4(3).
  3. Chiara BROCCOLINI & Alessia LO TURCO & Andrea PRESBITERO & Stefano STAFFOLANI, 2007. "International Outsourcing vs. ICT in explaining the wage gap in Italian Manufacturing," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 299, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  4. Michael Landesmann & Robert Stehrer, 2009. "South-North Integration, Outsourcing and Skills," wiiw Research Reports 353, The Vienna Institute for International Economic Studies, wiiw.

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