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Outsourcing and the Demand for Low-skilled Labour in German Manufacturing: New Evidence

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  • Ingo Geishecker
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    Abstract

    This paper analyses how international outsourcing has affected the relative demand for low skilled workers in Germany during the 1990s. In contrast to previous empirical work, the single elements of the input-output-matrix are used to disentangle international outsourcing and trade in final goods more accurately. The main finding is that during the 1990s international outsourcing had a significant negative impact on the relative demand for low-skilled workers, explaining between 19% and 24% of the overall decline in the relative demand for low-skilled labour.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38648.de/dp313.pdf
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    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 313.

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    Length: 20 p.
    Date of creation: 2002
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp313
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    Keywords: international trade; outsourcing; skill-bias; labour demand;

    Find related papers by JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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    1. Berman, E. & Bound, J. & Machin, S., 1997. "Implications of Skill-Biased Technological Change: International Evidence," Papers 25, Centre for Economic Performance & Institute of Economics.
    2. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Investment, Outsourcing and Relative Wages," NBER Working Papers 5121, National Bureau of Economic Research, Inc.
    3. Anderton, Bob & Brenton, Paul, 1999. "Outsourcing and Low-Skilled Workers in the UK," Bulletin of Economic Research, Wiley Blackwell, vol. 51(4), pages 267-85, October.
    4. David Hummels & Jun Ishii & Kei-Mu Yi, 1999. "The nature and growth of vertical specialization in world trade," Staff Reports 72, Federal Reserve Bank of New York.
    5. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November.
    6. Falk, Martin & Koebel, Bertrand M., 2000. "Outsourcing of services, imported materials and the demand for heterogeneous labour : an application of a generalised box-cox function," ZEW Discussion Papers 00-51, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. 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.
    8. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
    9. Markus Diehl, 1999. "The Impact of International Outsourcing on the Skill Structure of Employment: Empirical Evidence from German Manufacturing Industries," Kiel Working Papers 946, Kiel Institute for the World Economy.
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    Cited by:

    1. Geishecker, Ingo & Görg, Holger, 2004. "Winners and Losers: Fragmentation, Trade and Wages Revisited," IZA Discussion Papers 982, Institute for the Study of Labor (IZA).
    2. Tomiura, Eiichi, 2005. "Foreign outsourcing and firm-level characteristics: Evidence from Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 255-271, June.
    3. Carsten Ochsen & Heinz Welsch, 2005. "Technology, trade, and income distribution in West Germany: A factor-share analysis, 1976-1994," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 321-345, November.
    4. Lorentowicz, Andzelika & Marin, Dalia & Raubold, Alexander, 2005. "Is Human Capital Losing From Outsourcing? Evidence for Austria and Poland," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 76, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    5. Yiping Zhu, 2008. "Globalisation, Employment, and Wage Rate: What Does Literature Tell Us?," IMK Working Paper 07-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Michael Knogler & Volkhart Vincentz, 2005. "Auswirkungen der EU-Osterweiterung auf die Arbeitsmärkte der neuen Mitgliedstaaten und der EU-15, insbesondere Deutschland," Working Papers 257, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
    7. Gorg, Holger & Hanley, Aoife, 2005. "Labour demand effects of international outsourcing: Evidence from plant-level data," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 365-376.

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