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Labor Market Effects of Bounds on Domestic Outsourcing

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  • Jiménez, Bruno

    (Princeton University)

  • Rendon, Silvio

    (Inter-American Development Bank)

Abstract

We investigate the labor market effects of putting bounds to domestic outsourcing in Peru. A series of difference-in-differences specifications for individuals with high versus low predicted propensities to be outsourced show evidence of non-negative labor market effects. Limiting domestic outsourcing increases labor force participation by 1.5 percentage points and employment by 2.3 percentage points while it reduces unemployment by 0.8 percentage points, but has no statistically significant impact on labor formality nor real wages. Our results suggest that a policy of restricting outsourcing does neither destruct jobs nor does it improve workers' labor market conditions in the short-run.

Suggested Citation

  • Jiménez, Bruno & Rendon, Silvio, 2022. "Labor Market Effects of Bounds on Domestic Outsourcing," IZA Discussion Papers 15692, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15692
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    1. Jiménez, Bruno & Rendon, Silvio, 2025. "Labor market effects of bounds on domestic outsourcing," Journal of Development Economics, Elsevier, vol. 173(C).

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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