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Economic insecurity in the new wave of globalization: offshoring and the labor share under varieties of capitalism

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  • William Milberg
  • Deborah Winkler

Abstract

Countries subject to the same degree of exposure to globalization may experience very different levels of economic insecurity depending on social support or employment protections provided by the state or even due to insurance obtained by households. We identify five varieties of industrialized countries, characterized by national levels of 'labor support' and 'strictness of employment protection,' and analyze the importance of the role of the state in mediating the impact of globalization on economic security by estimating the relation between offshoring and the labor share of income across the OECD. We find that the effect of offshoring varies across countries depending on their regulatory structure and in particular on the degree of labor market support provided by governments. Regression analysis shows that for the countries providing 'more support', offshoring has a less unfavorable or more favorable effect on the labor share of national income.

Suggested Citation

  • William Milberg & Deborah Winkler, 2010. "Economic insecurity in the new wave of globalization: offshoring and the labor share under varieties of capitalism," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(3), pages 285-308.
  • Handle: RePEc:taf:irapec:v:24:y:2010:i:3:p:285-308
    DOI: 10.1080/02692171003701479
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    References listed on IDEAS

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    1. Alan S. Blinder, 2009. "How Many US Jobs Might be Offshorable?," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 10(2), pages 41-78, April.
    2. Amiti, Mary & Wei, Shang-Jin, 2006. "Service Offshoring, Productivity and Employment: Evidence from the US," CEPR Discussion Papers 5475, C.E.P.R. Discussion Papers.
    3. Luci Ellis & Kathryn Smith, 2010. "The Global Upward Trend in the Profit Share," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(3), pages 231-256.
    4. Minsik Choi, 2001. "Threat Effect of Foreign Direct Investment on Labor Union Wage Premium," Working Papers wp27, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Lori G. Kletzer, 2001. "Job Loss from Imports: Measuring the Costs," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 110.
    6. Jose Campa & Linda S. Goldberg, 1997. "The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries," NBER Working Papers 5919, National Bureau of Economic Research, Inc.
    7. Richard G. Anderson & Charles S. Gascon, 2007. "The perils of globalization: offshoring and economic insecurity of the American worker," Working Papers 2007-004, Federal Reserve Bank of St. Louis.
    8. William Milberg & Deborah Winkler, 2009. "Globalization, Offshoring and Economic Insecurity in Industrialized Countries," Working Papers 87, United Nations, Department of Economics and Social Affairs.
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    Cited by:

    1. Fiorini, Matteo & Hoekman, Bernard & Malgouyres, Clément, 2016. "Services Policy Reform and Manufacturing Employment: Evidence from Transition Economies," CEPR Discussion Papers 11694, C.E.P.R. Discussion Papers.
    2. Marika Karanassou & Hector Sala, 2012. "Distributional Consequences of Capital Accumulation, Globalisation and Financialisation in the US," Working Papers 695, Queen Mary University of London, School of Economics and Finance.

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