IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Foreign outsourcing, labour demand and the choice of functional form

Elasticity of the demand for low-skilled and high-skilled labour in the European Union with respect to foreign outsourcing is estimated, using alternative flexible cost functions. The choice of functional form is apparently not immaterial, as different forms can lead to conflicting conclusions. Tests that can help to discriminate between different forms of functional specification show that a traditional generalized Leontief cost function is often rejected in favour of a minflex Laurent generalized Leontief cost function. Overall, the estimation results show that foreign outsourcing had a significant impact on the demand for low-skilled and high-skilled workers in the sample period. The pattern is however industryspecific and suggests, in line with some recent theoretical models, an ambiguous relationship between outsourcing and labour demand. There is some evidence that high-skilled labour and capital are (relative) complements.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ucema.edu.ar/publicaciones/download/volume9/dumont.pdf
Download Restriction: no

Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): IX (2006)
Issue (Month): (November)
Pages: 255-273

as
in new window

Handle: RePEc:cem:jaecon:v:9:y:2006:n:2:p:255-273
Contact details of provider: Postal: Av. Córdoba 374, (C1054AAP) Capital Federal
Phone: (5411) 6314-3000
Fax: (5411) 4314-1654
Web page: http://www.cema.edu.ar/publicaciones/jae.html
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Deardorff, Alan V, 1998. "Technology, Trade, and Increasing Inequality: Does the Cause Matter for the Cure?," Journal of International Economic Law, Oxford University Press, vol. 1(3), pages 353-76, September.
  2. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-93, May.
  3. Tyers, Rod & Yang, Yongzheng, 2000. "Capital-Skill Complementarity and Wage Outcomes Following Technical Change in a Global Model," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 23-41, Autumn.
  4. W. Erwin Diewert & T.J. Wales, 1989. "Flexible Functional Forms and Global Curvature Conditions," NBER Technical Working Papers 0040, National Bureau of Economic Research, Inc.
  5. Deardorff, A.V., 1998. "Fragmentation Across Cones," Working Papers 427, Research Seminar in International Economics, University of Michigan.
  6. Pollak, Robert A. & Wales, Terence J., 1991. "The likelihood dominance criterion : A new approach to model selection," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 227-242, February.
  7. Berndt, Ernst R & Khaled, Mohammed S, 1979. "Parametric Productivity Measurement and Choice among Flexible Functional Forms," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1220-45, December.
  8. Hartmut Egger & Peter Egger, 2000. "Outsourcing and skill-specific employment in a small economy: Austria and the fall of the Iron Curtain," Economics working papers 2000-24, Department of Economics, Johannes Kepler University Linz, Austria.
  9. Strauss-Kahn, Vanessa, 2005. "Firms' location decision across asymmetric countries and employment inequality," European Economic Review, Elsevier, vol. 49(2), pages 299-320, February.
  10. Vanessa Strauss-Kahn, 2003. "The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France," NBER Working Papers 9716, National Bureau of Economic Research, Inc.
  11. Catherine J. Morrison & Donald Siegel, 1997. "External Capital Factors And Increasing Returns In U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 647-654, November.
  12. Oecd, 1998. "OECD Data on Skills: Employment by Industry and Occupation," OECD Science, Technology and Industry Working Papers 1998/4, OECD Publishing.
  13. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April.
  14. Frondel, Manuel & Schmidt, Christoph M., 2001. "Rejecting Capital-Skill Complementarity at all Costs," IZA Discussion Papers 316, Institute for the Study of Labor (IZA).
  15. Bob Anderton & Paul Brenton, 1998. "Outsourcing and Low-Skilled Workers in the UK," CSGR Working papers series 12/98, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
  16. Wilhelm Kohler, 2002. "The Distributional Effects of International Fragmentation," Economics working papers 2002_01, Department of Economics, Johannes Kepler University Linz, Austria.
  17. Caves, Douglas W & Christensen, Laurits R, 1980. "Global Properties of Flexible Functional Forms," American Economic Review, American Economic Association, vol. 70(3), pages 422-32, June.
  18. Robert Anderton & Paul Brenton & Eva Oscarsson, 2002. "What’s trade got to do with it? Relative demand for skills within Swedish manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 629-651, December.
  19. MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983. "Tests for model specification in the presence of alternative hypotheses : Some further results," Journal of Econometrics, Elsevier, vol. 21(1), pages 53-70, January.
  20. Krugman, Paul R., 2000. "Technology, trade and factor prices," Journal of International Economics, Elsevier, vol. 50(1), pages 51-71, February.
  21. Barnett, William A. & Lee, Yul W. & Wolfe, Michael D., 1985. "The three-dimensional global properties of the minflex laurent, generalized leontief, and translog flexible functional forms," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 3-31.
  22. Anderson, Richard G & Thursby, Jerry G, 1986. "Confidence Intervals for Elasticity Estimators in Translog Models," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 647-56, November.
  23. Elhanan Helpman & David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 93/84, International Monetary Fund.
  24. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  25. Paul, Catherine J Morrison & Siegel, Donald S, 2001. " The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(2), pages 241-64, June.
  26. Barnett, William A., 1985. "The minflex-laurent translog flexible functional form," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 33-44.
  27. Arndt, Sven W., 1997. "Globalization and the open economy," The North American Journal of Economics and Finance, Elsevier, vol. 8(1), pages 71-79.
  28. Konstantinos Giannakas & Kien C. Tran & Vangelis Tzouvelekas, 2003. "On the choice of functional form in stochastic frontier modeling," Empirical Economics, Springer, vol. 28(1), pages 75-100, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cem:jaecon:v:9:y:2006:n:2:p:255-273. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Valeria Dowding)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.