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Does Offshoring of Materials and Business Services Affect Employment? Evidence from a Small Open Economy

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  • Michel, Bernhard

    (Federal Planning Bureau, Belgium)

  • Rycx, François

    (Free University of Brussels)

Abstract

The fear of massive job losses has prompted a fast-growing literature on offshoring and its impact on employment in advanced economies. This paper examines the situation for Belgium. It improves the offshoring intensity measure by computing a volume measure of the share of imported intermediates in output and it is among the first to address both materials and business services offshoring to high-wage and low-wage countries. Estimations of static and dynamic industry-level labour demand equations augmented by offshoring intensities do not reveal a significant impact of either materials or business services offshoring on total employment for Belgium between 1995 and 2003.

Suggested Citation

  • Michel, Bernhard & Rycx, François, 2009. "Does Offshoring of Materials and Business Services Affect Employment? Evidence from a Small Open Economy," IZA Discussion Papers 4164, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4164
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    Cited by:

    1. Lindic, Mojca, 2015. "Global value chains and the effects of outsourcing and offshoring on firms: Evidence from matched firm-employee data," MPRA Paper 67437, University Library of Munich, Germany.
    2. Fuster García, Begoña & Martínez Mora, Carmen, 2013. "Offshoring of Services in Spain: International Fragmentation of Activities or Change in Procurement Sources?/Offshoring de Servicios en España: ¿Fragmentación internacional de actividades o cambio en ," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 31, pages 655-676, Septiembr.
    3. Omar Bamieh & Francesco Bripi & Matteo Fiorini, 2022. "Services trade and labor market outcomes: Evidence from Italian firms," Review of International Economics, Wiley Blackwell, vol. 30(3), pages 673-701, August.
    4. Omar Bamieh & Matteo Fiorini & Bernard Hoekman & Adam Jakubik, 2020. "Services Input Intensity and US Manufacturing Employment Responses to the China Shock," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(2), pages 333-349, September.
    5. Linda Andersson & Patrik Karpaty & Selen Savsin, 2016. "Firm-level effects of offshoring of materials and services on relative labor demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 321-350, May.
    6. repec:gdk:wpaper:53 is not listed on IDEAS
    7. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2015. "Integrated sectors - diversified earnings: the (missing) impact of offshoring on wages and wage convergence in the EU27," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(3), pages 325-350, September.
    8. Bernhard Michel & François Rycx, 2014. "Productivity Gains and Spillovers from Offshoring," Review of International Economics, Wiley Blackwell, vol. 22(1), pages 73-85, February.
    9. Begoña Fuster & Carmen Martínez-Mora & Adelaida Lillo-Bañuls, 2023. "Does Reshoring Generate Employment? A Study on Services Reshoring and Its Intra- and Inter-Sectoral Components," SAGE Open, , vol. 13(3), pages 21582440231, September.
    10. Fuster, Begoña & Lillo-Bañuls, Adelaida & Martínez-Mora, Carmen, 2019. "The effects of service offshoring on employment," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 529-538.
    11. Fuster, Begoña & Lillo-Bañuls, Adelaida & Martínez-Mora, Carmen, 2020. "Reshoring of services and employment," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 233-246.
    12. repec:gdk:wpaper:36 is not listed on IDEAS
    13. Bart Hertveldt & Bernhard Michel, 2013. "Offshoring and the Skill Structure of Labour Demand in Belgium," De Economist, Springer, vol. 161(4), pages 399-420, December.
    14. Andersson, Linda & Karpaty, Patik, 2012. "Firm Level Effects of Offshoring of Goods and Services on Relative Labor Demand," Working Papers 2013:2, Örebro University, School of Business.
    15. da Silveira, Giovani J.C., 2014. "An empirical analysis of manufacturing competitive factors and offshoring," International Journal of Production Economics, Elsevier, vol. 150(C), pages 163-173.
    16. Martin Tobal, 2019. "A model of wage and employment effects of service offshoring," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 303-338, February.
    17. Dumont, Michel & Rayp, Glenn & Willemé, Peter, 2012. "The bargaining position of low-skilled and high-skilled workers in a globalising world," Labour Economics, Elsevier, vol. 19(3), pages 312-319.
    18. Ida D'Attoma & Silvia Pacei, 2014. "Offshoring and Firm Performance: Evidence from the Italian Manufacturing Industry," Review of Development Economics, Wiley Blackwell, vol. 18(1), pages 29-44, February.
    19. Linda Andersson & Patrik Karpaty & Selen Savsin, 2017. "Labour Demand, Offshoring and Inshoring: Evidence from Swedish Firm-level Data," The World Economy, Wiley Blackwell, vol. 40(2), pages 240-274, February.
    20. Begoña Fuster & Adelaida Lillo-Bañuls & Carmen Martínez-Mora, 2018. "Offshoring of services as a competitive strategy in the tourism industry," Tourism Economics, , vol. 24(8), pages 963-979, December.
    21. Matilde Cardoso & Pedro Cunha Neves & Oscar Afonso & Elena Sochirca, 2021. "The effects of offshoring on wages: a meta-analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(1), pages 149-179, February.
    22. repec:gdk:wpaper:24 is not listed on IDEAS
    23. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2019. "Global Value Chains and Wages: Multi-Country Evidence from Linked Worker-Industry Data," Open Economies Review, Springer, vol. 30(3), pages 505-539, July.
    24. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    25. Joanna Wolszczak-Derlacz & Aleksandra Parteka, 2018. "The effects of offshoring to low-wage countries on domestic wages: a worldwide industrial analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(1), pages 129-163, February.

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    More about this item

    Keywords

    supply and use tables; imported intermediate inputs; industry-level employment; panel data; offshoring; labour demand equations;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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