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Do Labour Market Institutions Matter? Micro-Level Wage Effects of International Outsourcing in Three European Countries

  • Geishecker, Ingo


    (University of Göttingen)

  • Görg, Holger


    (Kiel Institute for the World Economy)

  • Munch, Jakob R.


    (University of Copenhagen)

This paper studies the impact of outsourcing on individual wages in three European countries with markedly different labour market institutions: Germany, the UK and Denmark. To do so we use individual level data sets for the three countries and construct comparable measures of outsourcing at the industry level, distinguishing outsourcing by broad region. Estimating the same specification on different data show that there are some interesting differences in the effect of outsourcing across countries. We discuss some possible reasons for these differences based on labour market institutions.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3212.

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Length: 24 pages
Date of creation: Dec 2007
Date of revision:
Publication status: published in: Review of World Economics, 2010, 146 (1), 179-198
Handle: RePEc:iza:izadps:dp3212
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  1. Marin, Dalia, 2004. "A Nation of Poets and Thinkers - Less so with Eastern Enlargement? Austria and Germany," CEPR Discussion Papers 4358, C.E.P.R. Discussion Papers.
  2. Görg, Holger & Hanley, Aoife & Strobl, Eric, 2007. "Productivity Effects of International Outsourcing: Evidence from Plant Level Data," CEPR Discussion Papers 6361, C.E.P.R. Discussion Papers.
  3. Arndt, Sven W., 1997. "Globalization and the open economy," The North American Journal of Economics and Finance, Elsevier, vol. 8(1), pages 71-79.
  4. Alexander Hijzen & Holger Görg & Robert C. Hine, 2005. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Economic Journal, Royal Economic Society, vol. 115(506), pages 860-878, October.
  5. Marin, Dalia, 2004. "‘A Nation of Poets and Thinkers’ - Less So with Eastern Enlargement? Austria and Germany," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 77, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  6. Sven Arndt, 1999. "Globalization and economic development," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(3), pages 309-318.
  7. Ingo Geishecker & Holger Görg, 2008. "Winners and losers: a micro-level analysis of international outsourcing and wages," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 243-270, February.
  8. Munch, Jakob R. & Skaksen, Jan Rose, 2005. "Specialization, Outsourcing and Wages," IZA Discussion Papers 1907, Institute for the Study of Labor (IZA).
  9. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-45, May.
  10. Wilhelm Kohler, 2004. "International outsourcing and factor prices with multistage production," Economic Journal, Royal Economic Society, vol. 114(494), pages C166-C185, 03.
  11. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April.
  12. Jakob Roland Munch, 2005. "International Outsourcing and Individual Job Separations," Discussion Papers 05-11, University of Copenhagen. Department of Economics.
  13. 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.
  14. Ingo Geishecker, 2006. "Does Outsourcing to Central and Eastern Europe Really Threaten Manual Workers' Jobs in Germany?," The World Economy, Wiley Blackwell, vol. 29(5), pages 559-583, 05.
  15. Mary Amiti & Shang-Jin Wei, 2006. "Service Offshoring and Productivity: Evidence from the United States," NBER Working Papers 11926, National Bureau of Economic Research, Inc.
  16. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
  17. 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.
  18. repec:oup:qjecon:v:114:y:1999:i:3:p:907-940 is not listed on IDEAS
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