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The Impact of International Outsourcing on the Skill Structure of Employment: Empirical Evidence from German Manufacturing Industries

  • Markus Diehl
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    In recent publications it has been argued that the change of the skill structure of industrial employment is caused by biased technical progress rather than by increasing international trade with low wage countries. However, in linking prices for final goods with prices of primary factors, most empirical studies have only dealt with international trade in final goods and have thereby neglected the impact of international outsourcing. In this paper it is argued that outsourcing can be understood as a substitution of imported intermediate inputs for domestic value added, and that such substitution may have an impact on the skill structure of domestic employment in favor of skilled labor. The empirical evidence for German manufacturing industries supports this hypothesis.

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    File URL: https://www.ifw-members.ifw-kiel.de/publications/the-impact-of-international-outsourcing-on-the-skill-structure-of-employment-empirical-evidence-from-german-manufacturing-industries/kap946.pdf
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    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 946.

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    Length: 64 pages
    Date of creation: Sep 1999
    Date of revision:
    Handle: RePEc:kie:kieliw:946
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    1. Berman, E. & Bound, J. & Machin, S., 1997. "Implications of Skill-Biased Technological Change: International Evidence," Papers 25, Centre for Economic Performance & Institute of Economics.
    2. Stephen Machin & Annette Ryan & John Van Reenen, 1996. "Technology and changes in skill structure: Evidence from an international panel of industries," IFS Working Papers W96/06, Institute for Fiscal Studies.
    3. Robert E. Baldwin & Glen G. Cain, 1997. "Shifts in U.S. Relative Wages: The Role of Trade, Technology and Factor Endowments," NBER Working Papers 5934, National Bureau of Economic Research, Inc.
    4. Edward E. Leamer, 1996. "In Search of Stolper-Samuelson Effects on U.S. Wages," NBER Working Papers 5427, National Bureau of Economic Research, Inc.
    5. Bergstrom, Villy & Panas, Epaminondas E, 1992. "How Robust Is the Capital-Skill Complementarity Hypothesis?," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 540-46, August.
    6. Klodt, Henning, 1997. "The transition to the service society: prospects for growth, productivity and employment," Kiel Working Papers 839, Kiel Institute for the World Economy.
    7. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April.
    8. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    9. Julian R. Betts, 1997. "The Skill Bias Of Technological Change In Canadian Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 146-150, February.
    10. Jonathan E. Haskel & Matthew J. Slaughter, 1998. "Does the Sector Bias of Skill-Biased Technical Change Explain Changing Wage Inequality?," NBER Working Papers 6565, National Bureau of Economic Research, Inc.
    11. Fitzenberger, Bernd & Franz, Wolfgang, 1997. "Flexibilität der qualifikatorischen Lohnstruktur und Lastverteilung der Arbeitslosigkeit: Eine ökonometrische Analyse für Westdeutschland," ZEW Discussion Papers 97-32, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Deardorff, A.V., 1998. "Fragmentation Across Cones," Papers 98-14, Michigan - Center for Research on Economic & Social Theory.
    13. Robert C. Feenstra & Gordon H. Hanson, 1996. "Globalization, Outsourcing, and Wage Inequality," NBER Working Papers 5424, National Bureau of Economic Research, Inc.
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