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Outsourcing Motives, Location Choice and Labour Market Implications: An Empirical Analysis for European Countries

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  • Marcus Neureiter
  • Peter Nunnenkamp

Abstract

We use data on motives of international outsourcing and location choices from a recent survey of European companies to assess the labour market repercussions at home. Employing Tobit models we differentiate between job losses as well as job creation for high and low skilled employees at the sector level in ten European home countries. Our findings are in conflict with public concerns about adverse employment effects resulting primarily from cost-oriented sourcing in low wage locations. The quantitative impact on job losses remains modest in the case of cost-saving motives. The simple divide between low and high wage locations hides substantial heterogeneity within both groups. We also find that job losses are typically compensated partly by new job creation, particularly for high skilled workers

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File URL: http://www.ifw-members.ifw-kiel.de/publications/outsourcing-motives-location-choice-and-labour-market-implications-an-empirical-analysis-for-european-countries/working-paper-1541.pdf
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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1541.

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Length: 29 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:kie:kieliw:1541

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Keywords: outsourcing; outward FDI; motives; location choice; job loss; job creation; (un)skilled labour;

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References

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  1. Blomström, Magnus & Fors, Gunnar & Lipsey, Robert E., 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Working Paper Series 490, Research Institute of Industrial Economics.
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Cited by:
  1. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.

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