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Do Labour Market Institutions Matter? Micro-level Wage Effects of International Outsourcing in Three European Countries

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  • Ingo Geishecker
  • Holger Görg
  • Jakob Roland Munch

Abstract

This paper studies the impact of outsourcing on individual wages in three European countries with markedly different labour market institutions: Germany, the UK and Denmark. To do so we use individual level data sets for the three countries and construct comparable measures of outsourcing at the industry level, distinguishing outsourcing by broad region. Estimating the same specification on different data shows that there are some interesting differences in the effect of outsourcing across countries. We discuss some possible reasons for these differences based on labour market institutions.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 07/42.

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Handle: RePEc:not:notgep:07/42

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Keywords: International outsourcing; individual wages; labour market institutions;

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  1. Görg, Holger & Hanley, Aoife & Strobl, Eric, 2007. "Productivity Effects of International Outsourcing: Evidence from Plant Level Data," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6361, C.E.P.R. Discussion Papers.
  2. Ingo Geishecker & Holger Görg, 2008. "Winners and losers: a micro-level analysis of international outsourcing and wages," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 41(1), pages 243-270, February.
  3. Alexander Hijzen & Holger Görg & Robert C. Hine, 2004. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Discussion Papers of DIW Berlin, DIW Berlin, German Institute for Economic Research 437, DIW Berlin, German Institute for Economic Research.
  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, MIT Press, vol. 72(2), pages 334-38, May.
  5. Jakob Roland Munch & Jan Rose Skaksen, 2005. "Specialization, Outsourcing and Wages," Discussion Papers, University of Copenhagen. Department of Economics 05-28, University of Copenhagen. Department of Economics.
  6. Wilhelm Kohler, 2004. "International outsourcing and factor prices with multistage production," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(494), pages C166-C185, 03.
  7. Marin, Dalia, 2004. "A Nation of Poets and Thinkers - Less so with Eastern Enlargement? Austria and Germany," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4358, C.E.P.R. Discussion Papers.
  8. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  9. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, Elsevier, vol. 43(4-6), pages 935-945, April.
  10. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, American Economic Association, vol. 86(2), pages 240-45, May.
  11. Sven Arndt, 1999. "Globalization and economic development," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 8(3), pages 309-318.
  12. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact Of Outsourcing And High-Technology Capital On Wages: Estimates For The United States, 1979-1990," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(3), pages 907-940, August.
  13. Mary Amiti & Shang-Jin Wei, 2006. "Service Offshoring and Productivity: Evidence from the United States," NBER Working Papers 11926, National Bureau of Economic Research, Inc.
  14. Arndt, Sven W., 1997. "Globalization and the open economy," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 8(1), pages 71-79.
  15. Jakob Roland Munch, 2005. "International Outsourcing and Individual Job Separations," Discussion Papers, University of Copenhagen. Department of Economics 05-11, University of Copenhagen. Department of Economics.
  16. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 115(500), pages 1-27, 01.
  17. Marin, Dalia, 2004. "‘A Nation of Poets and Thinkers’ - Less So with Eastern Enlargement? Austria and Germany," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 77, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  18. Ingo Geishecker, 2006. "Does Outsourcing to Central and Eastern Europe Really Threaten Manual Workers' Jobs in Germany?," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 29(5), pages 559-583, 05.
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Cited by:
  1. Yu-Fu Chen & Holger Görg & Dennis Görlich & Hassan Molana & Catia Montagna & Yama Temouri, 2014. "Globalisation and the future of the welfare state," WWWforEurope Working Papers series, WWWforEurope 54, WWWforEurope.
  2. Laura Márquez-Ramos, 2013. "The effect of fragmentation on skill and industry wage premiums: Evidence from the European Union," Working Papers, Economics Department, Universitat Jaume I, Castellón (Spain) 2013/18, Economics Department, Universitat Jaume I, Castellón (Spain).
  3. Wagner, Joachim, 2011. "Productivity and International Firm Activities: What Do We Know?," IZA Policy Papers, Institute for the Study of Labor (IZA) 23, Institute for the Study of Labor (IZA).
  4. Lurweg, Maren, 2010. "Perceived job insecurity, unemployment risk and international trade: A micro-level analysis of employees in German service industries," CAWM Discussion Papers, Center of Applied Economic Research Münster (CAWM), University of Münster 32, Center of Applied Economic Research Münster (CAWM), University of Münster.
  5. Amador, João & Cabral, Sónia, 2008. "International fragmentation of production in the Portuguese economy: What do different measures tell us?," MPRA Paper 9783, University Library of Munich, Germany.
  6. Yiping Zhu, 2008. "Globalisation, Employment, and Wage Rate: What Does Literature Tell Us?," IMK Working Paper, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute 07-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  7. Richard Frensch & Jan Hanousek & Evžen Kocenda, 2012. "Incomplete Specialization and Offshoring across Europe," CESifo Working Paper Series, CESifo Group Munich 3809, CESifo Group Munich.
  8. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers, Banco de Portugal, Economics and Research Department w201403, Banco de Portugal, Economics and Research Department.
  9. Éva Polgár & Julia Wörz, 2010. "No risk and some fun? Trade and wages in the enlarged European Union," Empirica, Springer, Springer, vol. 37(2), pages 127-163, May.
  10. Amador, João & Cabral, Sónia, 2009. "Vertical specialization across the world: A relative measure," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 20(3), pages 267-280, December.
  11. Lurweg, Maren & Uhde, Nicole, 2010. "International trade and individual labour market perspectives: A micro-level analysis of German manufacturing workers," CAWM Discussion Papers, Center of Applied Economic Research Münster (CAWM), University of Münster 31, Center of Applied Economic Research Münster (CAWM), University of Münster.
  12. 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, The Vienna Institute for International Economic Studies, wiiw 383, The Vienna Institute for International Economic Studies, wiiw.

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