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Vertical disintegration and training: evidence from a matched employer–employee survey

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  • Elisabetta Magnani

    ()

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    The mechanism through which outsourcing favourably impacts on workplace performance, particularly productivity, is still unclear. I explore the hypothesis that it does so by impacting workers’ training. I use AWIRS-1995, a matched employer–employee survey that reports ample information on the extent of technology and organizational change in Australian workplaces. I find that there is a positive and significant impact of outsourcing on training when I do not control for the correlation between ununobservable factors in these two binary outcomes. However, once I control for this correlation using a bivariate probit estimator, the training impact of outsourcing becomes negative. I then assess the sensitivity of the outsourcing effect to endogeneity by using the method advocated by Altonji et al. (J Polit Econ 113(1):151–184, 2005 ) to find that this latter result persists even in the presence of a low correlation between unobservables. Copyright Springer Science+Business Media, LLC 2012

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    File URL: http://hdl.handle.net/10.1007/s11123-011-0256-9
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    Article provided by Springer in its journal Journal of Productivity Analysis.

    Volume (Year): 38 (2012)
    Issue (Month): 2 (October)
    Pages: 199-217

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    Handle: RePEc:kap:jproda:v:38:y:2012:i:2:p:199-217
    DOI: 10.1007/s11123-011-0256-9
    Contact details of provider: Web page: http://www.springer.com

    Order Information: Web: http://www.springer.com/economics/microeconomics/journal/11123/PS2

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    1. Catherine J. Morrison Paul & Mahmut Yasar, 2009. "Outsourcing, productivity, and input composition at the plant level," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 422-439, May.
    2. William H. Greene, 1998. "Gender Economics Courses in Liberal Arts Colleges: Further Results," The Journal of Economic Education, Taylor & Francis Journals, vol. 29(4), pages 291-300, January.
    3. Elisabetta Magnani & David Prentice, 2010. "Outsourcing And Unionization: A Tale Of Misallocated (Resistance) Resources," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 460-482, 04.
    4. Erkki Koskela & Ronnie Schöb, 2010. "Outsourcing of Unionized Firms and the Impact of Labor Market Policy Reforms," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 682-695, 09.
    5. Richard Harris & Donald S. Siegel & Mike Wright, 2005. "Assessing the Impact of Management Buyouts on Economic Efficiency: Plant-Level Evidence from the United Kingdom," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 148-153, February.
    6. Sharon Novak & Scott Stern, 2007. "How Does Outsourcing Affect Performance Dynamics? Evidence from the Automobile Industry," NBER Working Papers 13235, National Bureau of Economic Research, Inc.
    7. Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 394-424, July.
    8. Hamermesh, Daniel, 2008. "Fun with matched firm-employee data: Progress and road maps," Labour Economics, Elsevier, vol. 15(4), pages 662-672, August.
    9. Susan Houseman & Christopher Kurz & Paul Lengermann & Benjamin Mandel, 2011. "Offshoring Bias in U.S. Manufacturing," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 111-132, Spring.
    10. Lewis M. Segal & Daniel G. Sullivan, 1997. "The Growth of Temporary Services Work," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 117-136, Spring.
    11. 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 241-264, June.
    12. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    13. Elisabetta Magnani, 2006. "Technological diffusion, the diffusion of skill and the growth of outsourcing in US manufacturing," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(7), pages 617-647.
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