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Labor Market Effects of International Outsourcing: How Measurement Matters

  • Daniel Horgos

As regards labor market effects of International Outsourcing, empirical studies have difficulties in confirming theoretical results. The use of different indices adds to the puzzle. The paper examines whether measurement differences are one reason for the mismatch between empirical and theoretical findings. In fact, considering the properties of various outsourcing indices and applying a panel data estimation of the effects on the within industries' wage gap in Germany, theory and empirics can be reconciled: while the wage gap increases in the aggregate, the service sector and the high skill intensive industries, it decreases in the low skill intensive industries - which is in line with theoretical findings by Arndt (1997, 1998).

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.73997.de/diw_sp0058.pdf
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 58.

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Length: 30 p.
Date of creation: 2007
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp58
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  1. Kierzkowski, Henryk, 2005. "Outsourcing and fragmentation: Blessing or threat?," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 233-235.
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  8. Hijzen, Alexander & Görg, Holger & Hine, Robert C., 2004. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," IZA Discussion Papers 1249, Institute for the Study of Labor (IZA).
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  28. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
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  33. Geishecker, Ingo & Gorg, Holger, 2005. "Do unskilled workers always lose from fragmentation?," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 81-92, March.
  34. Yukako Ono & Victor Stango, 2005. "Supplier switching and outsourcing," Working Paper Series WP-05-22, Federal Reserve Bank of Chicago.
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  37. Hartmut Egger & Peter Egger, 2002. "How international outsourcing drives up Eastern European wages," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(1), pages 83-96, March.
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