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

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  • Bernhard Michel
  • François Rycx

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

  • Bernhard Michel & François Rycx, 2009. "Does Offshoring of Materials and Business Services Affect Employment? Evidence from a Small Open Economy," Working Papers CEB 09-018.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:09-018
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Sabina Szymczak & Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2019. "Position In Global Value Chains: The Impact On Wages In Central And Eastern European Countries," GUT FME Working Paper Series A 53, Faculty of Management and Economics, Gdansk University of Technology, revised Jan 2022.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    17. 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.
    18. 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.
    19. 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.
    20. 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.
    21. 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.
    22. 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.
    23. Bernhard Michel & François Rycx, 2014. "Productivity Gains and Spillovers from Offshoring," Review of International Economics, Wiley Blackwell, vol. 22(1), pages 73-85, February.
    24. Cristina Di Stefano & Luciano Fratocchi & Carmen Martínez‐Mora & Fernando Merino, 2024. "Manufacturing reshoring and sustainable development goals: A home versus host country perspective," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(1), pages 863-875, February.

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    Keywords

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    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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