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Trade Integration, Outsourcing And Employment In Austria: A Decomposition Approach

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  • Wolfgang Koller
  • Robert Stehrer

Abstract

Outsourcing and trade integration of advanced countries is debated with respect to employment effects, in particular for low educated workers - at least in relative terms. We study the employment effects - differentiated by educational attainment levels - of changes in the patterns of trade integration and outsourcing in the Austrian economy over the periods 1995-2000 and 2000-2005 using hierarchical decomposition analysis based on deflated input-output tables. Outsourcing is modeled as changes in the shares of domestically produced intermediates in total intermediates. A similar decomposition of the final demand vector allows us to draw conclusions on the overall employment effects of trade integration. The results suggest that the expected negative employment effects of outsourcing and rising import penetration have been overcompensated by increasing exports. Thus, the overall employment effects of Austrian trade integration have been positive for all educational attainment groups. However, whereas the total effects have been strongest for medium and high educated workers over the period 1995-2000, employment of low educated workers have been strongest and positively affected over the period 2000-2005. This pattern can be explained by a more sluggish export performance together with stronger negative effects of outsourcing and import penetration in medium and high-skill intensive products.

Suggested Citation

  • Wolfgang Koller & Robert Stehrer, 2010. "Trade Integration, Outsourcing And Employment In Austria: A Decomposition Approach," Economic Systems Research, Taylor & Francis Journals, vol. 22(3), pages 237-261.
    • Handle: RePEc:taf:ecsysr:v:22:y:2010:i:3:p:237-261
    DOI: 10.1080/09535314.2010.493504
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    1. Skolka, Jiri, 1989. "Input-output structural decomposition analysis for Austria," Journal of Policy Modeling, Elsevier, vol. 11(1), pages 45-66.
    2. Wolfgang Koller & Robert Stehrer, 2010. "Trade Integration, Outsourcing And Employment In Austria: A Decomposition Approach," Economic Systems Research, Taylor & Francis Journals, vol. 22(3), pages 237-261.
    3. Robert C. Feenstra, 2010. "Offshoring in the Global Economy: Microeconomic Structure and Macroeconomic Implications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262013835, December.
    4. Brian Wixted & Norihiko Yamano & Colin Webb, 2006. "Input-Output Analysis in an Increasingly Globalised World: Applications of OECD's Harmonised International Tables," OECD Science, Technology and Industry Working Papers 2006/7, OECD Publishing.
    5. Michael Peneder, 2007. "A sectoral taxonomy of educational intensity," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(3), pages 189-212, July.
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    Cited by:

    1. Monarch, Ryan & Park, Jooyoun & Sivadasan, Jagadeesh, 2017. "Domestic gains from offshoring? Evidence from TAA-linked U.S. microdata," Journal of International Economics, Elsevier, vol. 105(C), pages 150-173.
    2. Mikuláš Luptáèik & Bernhard Mahlberg, 2012. "Efficiency change over time in a multisectoral economic system," Department of Economic Policy Working Paper Series 001, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    3. Hong, Jae Pyo & Byun, Jeong Eun & Kim, Pang Ryong, 2016. "Structural changes and growth factors of the ICT industry in Korea: 1995–2009," Telecommunications Policy, Elsevier, vol. 40(5), pages 502-513.
    4. Yan, Yunfeng & Li, Xiyuan & Wang, Ran & Zhao, Zhongxiu & Jiao, Aodong, 2023. "Decomposing the carbon footprints of multinational enterprises along global value chains," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 13-28.
    5. Arne J. Nagengast & Robert Stehrer, 2016. "The Great Collapse in Value Added Trade," Review of International Economics, Wiley Blackwell, vol. 24(2), pages 392-421, May.
    6. Wolfgang Koller & Robert Stehrer, 2010. "Trade Integration, Outsourcing And Employment In Austria: A Decomposition Approach," Economic Systems Research, Taylor & Francis Journals, vol. 22(3), pages 237-261.
    7. Mahlberg, Bernhard & Luptacik, Mikulas, 2014. "Eco-efficiency and eco-productivity change over time in a multisectoral economic system," European Journal of Operational Research, Elsevier, vol. 234(3), pages 885-897.
    8. Kirill Muradov, 2021. "Structural decomposition analysis with disaggregate factors within the Leontief inverse," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-17, December.
    9. Liboreiro, Pablo R. & Fernández, Rafael & García, Clara, 2021. "The drivers of deindustrialization in advanced economies: A hierarchical structural decomposition analysis," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 138-152.
    10. Croner, Daniel & Koller, Wolfgang & Mahlberg, Bernhard, 2018. "Economic drivers of greenhouse gas-emissions in small open economies: A hierarchical structural decomposition analysis," MPRA Paper 85755, University Library of Munich, Germany.
    11. Jooyoun Park, 2018. "The Cleansing Effect of Offshoring in an Analysis of Employment," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(2), pages 242-272, April.
    12. Yang Lianling & Yang Cuihong, 2017. "Changes in domestic value added in China’s exports: a structural decomposition analysis approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-12, December.
    13. Semih Akcomak & Henri de Groot & Stefan Groot, 2013. "The impact of trade, offshoring and multinationals on job loss and job finding," CPB Discussion Paper 252, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Semih Akcomak & Henri de Groot & Stefan Groot, 2013. "The impact of trade, offshoring and multinationals on job loss and job finding," CPB Discussion Paper 252.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
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    More about this item

    Keywords

    Outsourcing; Employment; Hierarchical decomposition; Input-output modeling;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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