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Domestic Outsourcing of Low-Skill Jobs

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Firms increasingly contract out a wide range of activities that were previously done in-house, such as cleaning, security, logistics, and catering. This paper provides evidence on the impact of outsourcing on workers' earnings and possible reasons that firms outsource by estimating panel data and event study models using Norwegian administrative data. Workers who become outsourced experience large earnings declines, which are driven by reductions in working hours. Firms are likely to outsource to reduce costs and reduce rigidity in contractual working hours, which is possible as contractor firms operate on lower non-wage costs and have more workers with less than full-time contractual working hours.

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  • Katarzyna Segiet, 2025. "Domestic Outsourcing of Low-Skill Jobs," Discussion Papers 1030, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:1030
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    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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