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Offshoring, Wages and Job Security of Temporary Workers

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  • Görg, Holger

    (Kiel Institute for the World Economy)

  • Görlich, Dennis

    (Kiel Institute for the World Economy)

Abstract

We investigate the impact of offshoring on individual level wages and unemployment probabilities and pay particular attention to the question of whether workers on temporary contracts are affected differently than workers on permanent contracts. Data are taken from the German Socio-Economic Panel (SOEP), linked with industry-level data on offshoring of materials and services inputs calculated from the World Input Output Database (WIOD). In manufacturing we find that temporary workers face a significant reduction in wages as materials offshoring increases, while permanent workers' wages are unaffected or even tend to increase. Offshoring of core activities generally also tends to reduce the probability of becoming unemployed, and more so for temporary than for permanent workers. By contrast, offshoring of services inputs does not have any statistically significant effects on either wages or employment probabilities in manufacturing. In the service industries, workers are affected in terms of employment probabilities from offshoring of services inputs only, although, in contrast to manufacturing industries, there are no statistically significant effects on individual wages from any type of offshoring.

Suggested Citation

  • Görg, Holger & Görlich, Dennis, 2012. "Offshoring, Wages and Job Security of Temporary Workers," IZA Discussion Papers 6897, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6897
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    Cited by:

    1. Vincent FRIGANT, 2019. "Industry 4.0, towards a de-globalization of value chains? Expected effects of advanced industrial robotics and additive manufacturing on the coordination system," Cahiers du GREThA (2007-2019) 2019-12, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    2. Borrs, Linda & Eppelsheimer, Johann, 2020. "The effects of foreign direct investment on job stability: Upgrades, downgrades, and separations," IAB Discussion Paper 202024, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. bernhard Boockmann, 2014. "Offshoring Potential and Employment Dynamics," IAW Discussion Papers 111, Institut für Angewandte Wirtschaftsforschung (IAW).

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    More about this item

    Keywords

    job security; temporary work; offshoring; wages;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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