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Outsourcing and the rise in services

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  • Berlingieri, Giuseppe

Abstract

This paper investigates the impact of outsourcing on sectoral reallocation in the U.S. over the period 1947-2007, and on the rise in services in particular. Roughly 40% of the growth of the service sector comes from professional and business services. This is an unusual industry as more than 90% of its output is an intermediate input to other firms, and it is where most of the service outsourcing activity is concentrated. These facts are essential to understanding the structure of the economy: professional and business services have experienced an almost fourfold increase in their forward linkage, the largest change in input-output linkages over the past 60 years. Using a simple gross output accounting framework, I calculate the contribution of the change in the composition of intermediates and their sourcing mode to the reallocation of employment across sectors. I find that the evolution of the input-output structure accounts for up to 33% of the increase in service employment, and professional and business services outsourcing alone contributes almost half of that amount.

Suggested Citation

  • Berlingieri, Giuseppe, 2013. "Outsourcing and the rise in services," LSE Research Online Documents on Economics 51532, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:51532
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    Cited by:

    1. repec:oup:qjecon:v:132:y:2017:i:3:p:1165-1217. is not listed on IDEAS
    2. Bernard Hoekman, 2017. "Trade in services: Opening markets to create opportunities," WIDER Working Paper Series 031, World Institute for Development Economic Research (UNU-WIDER).
    3. Andrea Ascani & Simona Iammarino, 2017. "Multinational enterprises, service outsourcing and regional structural change," Papers in Evolutionary Economic Geography (PEEG) 1724, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2017.
    4. Deborah Goldschmidt & Johannes F. Schmieder, 2017. "The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), pages 1165-1217.
    5. Annette Bernhardt & Rosemary Batt & Susan Houseman & Eileen Appelbaum, 2016. "Working Paper: Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," CEPR Reports and Issue Briefs 2016-03, Center for Economic and Policy Research (CEPR).
    6. Evan Capeluck, 2015. "The Evolution of Manufacturing Employment in Canada: The Role of Outsourcing," CSLS Research Reports 2015-18, Centre for the Study of Living Standards.
    7. Evan Capeluck, 2015. "Explanations of the Decline in Manufacturing Employment in Canada," CSLS Research Reports 2015-17, Centre for the Study of Living Standards.
    8. Annette Bernhardt & Rosemary L. Batt & Susan Houseman & Eileen Appelbaum, 2016. "Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," Upjohn Working Papers and Journal Articles 16-253, W.E. Upjohn Institute for Employment Research.
    9. repec:fip:feddgm:00030 is not listed on IDEAS
    10. Matthew Calver & Evan Capeluck, 2016. "Further Evidence on the Contribution of Services Outsourcing to the Decline in Manufacturing’s Employment Share in Canada," CSLS Research Reports 2016-11, Centre for the Study of Living Standards.
    11. Georg Duernecker & Berthold Herrendorf, 2017. "Structural Transformation of Occupation Employment," 2017 Meeting Papers 1239, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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