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Winners and Losers: Fragmentation, Trade and Wages Revisited

Author Info

Listed author(s):
  • Ingo Geishecker
  • Holger Görg

Abstract

Our paper investigates the link between international outsourcing and wages utilising a large household panel and combining it with industry level information on industries' outsourcing activities from input-output tables. By doing so we can arguably overcome the potential aggregation bias as well as other shortcomings that affect industry level studies. We find that outsourcing has had a marked impact on wages. Distinguishing three skill categories we find evidence that outsourcing reduced the real wage for workers in the lowest skill categories by up to 1.8% while it increased real wages for high-skilled workers by up to 3.3%. This result is robust to a number of different specifications.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.41040.de/dp385.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 385.

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Length: 27 p.
Date of creation: 2003
Handle: RePEc:diw:diwwpp:dp385
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Keywords: Outsourcing; Fragmentation; Skills; Wages;

Other versions of this item:

Find related papers by JEL classification:
  • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
  • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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  1. Eswar S. Prasad, 2004. "The Unbearable Stability of the German Wage Structure: Evidence and Interpretation," IMF Staff Papers, Palgrave Macmillan, vol. 51(2), pages 354-385.
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  9. Susan N. Houseman & Katharine G. Abraham, 1995. "Earnings Inequality in Germany," Book chapters authored by Upjohn Institute researchers,in: Richard B. Freeman & Lawrence F. Katz (ed.), Differences and Changes in Wage Structures, pages 371-403 W.E. Upjohn Institute for Employment Research.
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  13. Burda, Michael C. & Mertens, Antje, 2001. "Estimating wage losses of displaced workers in Germany," Labour Economics, Elsevier, vol. 8(1), pages 15-41, January.
  14. Head, Keith & Ries, John, 2002. "Offshore production and skill upgrading by Japanese manufacturing firms," Journal of International Economics, Elsevier, vol. 58(1), pages 81-105, October.
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  19. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
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Cited by:

  1. Michael Landesmann & Robert Stehrer, 2009. "South-North Integration, Outsourcing and Skills," wiiw Research Reports 353, The Vienna Institute for International Economic Studies, wiiw.
  2. Chiara BROCCOLINI & Alessia LO TURCO & Andrea PRESBITERO & Stefano STAFFOLANI, 2007. "International Outsourcing vs. ICT in explaining the wage gap in Italian Manufacturing," Working Papers 299, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Michele Raitano & Eleonora Romano & Pietro Zoppoli, 2016. "The sectorial intensity of production of renewable energy sources in Italy:measurement and effects on earnings," Working Papers 1, Department of the Treasury, Ministry of the Economy and of Finance.
  4. Ogloblin, C, 2004. "Global Outsourcing of Human Capital and the Incidence of Unemployment in the United States," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(3).
  5. Eva Katalin Polgar & Julia Woerz, 2011. "Trade With Central and Eastern Europe: Is It Really a Threat to Wages in the West?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 1-31, March.

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