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Offshoring in Europe—Evidence of a Two-Way Street from Denmark

Author

Listed:
  • Peter D. Ørberg Jensen

    () (Copenhagen Business School)

  • Jacob Funk Kirkegaard

    () (Peterson Institute for International Economics)

  • Nicolai Søndergaard Laugesen

    () (Rambøll Management)

Abstract

Based on a large Danish survey of companies in tradable goods and services sectors, this working paper presents the results of offshoring and its impact on jobs, adding new perspectives to the globalization debate. Globalization entails a cross-border flow of jobs, but contrary to the mainstream media portrayal of globalization, it is not a one-way but a two-way street. In 2002–05 more jobs were created as a result of offshoring of activities into eastern Denmark from companies outside Denmark (i.e., inshored to Denmark) than were eliminated due to offshoring from companies in the Danish region. Overall, the employment effects of both offshoring and inshoring were found to be limited to less than 1 percent of all jobs either lost to offshoring or gained via inshoring. For Denmark, the worries in purely numerical terms regarding the employment effects of globalization seem overly alarmist. However, the trends revealed in the study do pose challenges for low-skilled workers—the group most negatively affected—and for highly skilled specialists, who face pressure to constantly upgrade their skills. Policy implications can be drawn in view of our results to ensure that labor markets are able to meet the demands of globalizing firms.

Suggested Citation

  • Peter D. Ørberg Jensen & Jacob Funk Kirkegaard & Nicolai Søndergaard Laugesen, 2006. "Offshoring in Europe—Evidence of a Two-Way Street from Denmark," Working Paper Series WP06-3, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp06-3
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    References listed on IDEAS

    as
    1. Peter Maskell & Torben Pedersen & Bent Petersen & Jens Dick-Nielsen, 2007. "Learning Paths to Offshore Outsourcing: From Cost Reduction to Knowledge Seeking," Industry and Innovation, Taylor & Francis Journals, vol. 14(3), pages 239-257.
    2. Kakabadse, Andrew & Kakabadse, Nada, 2002. "Trends in Outsourcing:: Contrasting USA and Europe," European Management Journal, Elsevier, vol. 20(2), pages 189-198, April.
    3. James Markusen, 2005. "Modeling the Offshoring of White-Collar Services: From Comparative Advantage to the New Theories of Trade and FDI," NBER Working Papers 11827, National Bureau of Economic Research, Inc.
    4. Jacob Funk Kirkegaard, 2005. "Outsourcing and Offshoring: Pushing the European Model Over the Hill, Rather Than Off the Cliff!," Working Paper Series WP05-1, Peterson Institute for International Economics.
    5. Catherine L. Mann, 2003. "Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth," Policy Briefs PB03-11, Peterson Institute for International Economics.
    6. Edward M. Graham, 2000. "Fighting the Wrong Enemy: Antiglobal Activists and Multinational Enterprises," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 91.
    7. Jagdish Bhagwati & Arvind Panagariya, 2004. "The Muddles over Outsourcing," Journal of Economic Perspectives, American Economic Association, pages 93-114.
    8. Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
    9. Diana Farrell, 2005. "Offshoring: Value Creation through Economic Change," Journal of Management Studies, Wiley Blackwell, vol. 42(3), pages 675-683, May.
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    Citations

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    Cited by:

    1. Desireé van Welsum & Xavier Reif, 2009. "We Can Work It Out: The Globalization of ICT-Enabled Services," NBER Chapters,in: International Trade in Services and Intangibles in the Era of Globalization, pages 289-325 National Bureau of Economic Research, Inc.
    2. Jensen, Peter D. Ørberg, 2009. "A learning perspective on the offshoring of advanced services," Journal of International Management, Elsevier, vol. 15(2), pages 181-193, June.
    3. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    4. Magdolna Sass & Gábor Hunya, 2014. "Escaping to the East? Relocation of business activities to and from Hungary, 2003–2011," IEHAS Discussion Papers 1407, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    5. Elisa Borghi & Rosario Crinò, 2013. "Service offshoring and wages: worker-level evidence from Italy," LIUC Papers in Economics 264, Cattaneo University (LIUC).

    More about this item

    Keywords

    Labor Market; Offshoring; Offshore Outsourcing; High- and Low-Skilled Workers; Skill Bias; Denmark; Flexicurity;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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