IDEAS home Printed from https://ideas.repec.org/p/upj/weupjo/16-253.html
   My bibliography  Save this paper

Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality

Author

Listed:
  • Annette Bernhardt

    (University of California-Berkeley)

  • Rosemary L. Batt

    (Cornell University)

  • Susan Houseman

    (W.E. Upjohn Institute for Employment Research)

  • Eileen Appelbaum

    (Center for Economic and Policy Research)

Abstract

The goal of this paper is to develop a comprehensive research agenda to analyze trends in domestic outsourcing in the United States—firms’ use of contractors and independent contractors—and its effects on job quality and inequality. In the process, we review definitions of outsourcing, the available scant empirical research, and limitations of existing data sources. We also summarize theories that attempt to explain why firms contract out for certain functions and assess their predictions about likely impacts on job quality. We then lay out in detail a major research initiative on domestic outsourcing, discussing the questions it should answer and providing a menu of research methodologies and potential data sources. Such a research investment will be a critical resource for policymakers and other stakeholders as they seek solutions to problems arising from the changing nature of work.

Suggested Citation

  • Annette Bernhardt & Rosemary L. Batt & Susan Houseman & Eileen Appelbaum, 2016. "Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," Upjohn Working Papers 16-253, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:16-253
    as

    Download full text from publisher

    File URL: http://research.upjohn.org/cgi/viewcontent.cgi?article=1271&context=up_workingpapers
    Download Restriction: This material is copyrighted. Permission is required to reproduce any or all parts.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paul A. Gompers & Andrew Metrick, 2001. "Institutional Investors and Equity Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 229-259.
    2. Susan N. Houseman, 2001. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," ILR Review, Cornell University, ILR School, vol. 55(1), pages 149-170, October.
    3. Giuseppe Berlingieri, 2013. "Outsourcing and the Rise in Services," CEP Discussion Papers dp1199, Centre for Economic Performance, LSE.
    4. Howard Gospel & Mari Sako, 2010. "The unbundling of corporate functions: the evolution of shared services and outsourcing in human resource management," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(5), pages 1367-1396, October.
    5. Deborah Goldschmidt & Johannes F. Schmieder, 2017. "The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1165-1217.
    6. Arindrajit Dube & Ethan Kaplan, 2010. "Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards," ILR Review, Cornell University, ILR School, vol. 63(2), pages 287-306, January.
    7. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    8. Richard M. Locke & Fei Qin & Alberto Brause, 2007. "Does Monitoring Improve Labor Standards? Lessons from Nike," ILR Review, Cornell University, ILR School, vol. 61(1), pages 3-31, October.
    9. Susan Houseman & Machiko Osawa (ed.), 2003. "Nonstandard Work in Developed Economies: Causes and Consequences," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number nwde.
    10. George Erickcek & Susan Houseman & Arne Kalleberg, 2002. "The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools," Upjohn Working Papers 03-90, W.E. Upjohn Institute for Employment Research.
    11. Matthew Dey & Susan N. Houseman & Anne Polivka, 2010. "What Do We Know about Contracting Out in the United States? Evidence from Household and Establishment Surveys," Book chapters authored by Upjohn Institute researchers, in: Katharine G. Abraham & James R. Spletzer & Michael J. Harper (ed.),Labor in the New Economy, pages 267-304, W.E. Upjohn Institute for Employment Research.
    12. Bernhardt, Annette, 2014. "Labor Standards and the Reorganization of Work: Gaps in Data and Research," Institute for Research on Labor and Employment, Working Paper Series qt3hc6t3d5, Institute of Industrial Relations, UC Berkeley.
    13. Brian J. Hall & Jeffrey B. Liebman, 1998. "Are CEOs Really Paid Like Bureaucrats?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 653-691.
    14. MinWoong Ji & David Weil, 2015. "The Impact of Franchising on Labor Standards Compliance," ILR Review, Cornell University, ILR School, vol. 68(5), pages 977-1006, October.
    15. Susan N. Houseman & Carolyn Heinrich, 2015. "Temporary Help Employment in Recession and Recovery," Upjohn Working Papers 15-227, W.E. Upjohn Institute for Employment Research.
    16. Carolyn J. Heinrich & Peter R. Mueser & Kenneth R. Troske, 2005. "Welfare to Temporary Work: Implications for Labor Market Outcomes," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 154-173, February.
    17. Alon Brav & Wei Jiang & Hyunseob Kim, 2011. "The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes," NBER Working Papers 17517, National Bureau of Economic Research, Inc.
    18. George P. Baker & Thomas N. Hubbard, 2003. "Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information," American Economic Review, American Economic Association, vol. 93(3), pages 551-572, June.
    19. Rees, Albert, 1993. "The Role of Fairness in Wage Determination," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 243-252, January.
    20. Alon Brav & Wei Jiang & Hyunseob Kim, 2015. "Editor's Choice The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes," The Review of Financial Studies, Society for Financial Studies, vol. 28(10), pages 2723-2769.
    21. Michael G. Jacobides & Sidney G. Winter, 2005. "The co‐evolution of capabilities and transaction costs: explaining the institutional structure of production," Strategic Management Journal, Wiley Blackwell, vol. 26(5), pages 395-413, May.
    22. Rosemary Batt & David Holman & Ursula Holtgrewe, 2009. "The Globalization of Service Work: Comparative Institutional Perspectives on Call Centers," ILR Review, Cornell University, ILR School, vol. 62(4), pages 453-488, July.
    23. Rosemary Batt & Hiroatsu Nohara, 2009. "How Institutions and Business Strategies Affect Wages: A Cross-National Study of Call Centers," ILR Review, Cornell University, ILR School, vol. 62(4), pages 533-552, July.
    24. Timothy J. Sturgeon, 2002. "Modular production networks: a new American model of industrial organization," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(3), pages 451-496, June.
    25. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    26. David Card & Thomas Lemieux & W. Craig Riddell, 2004. "Unions and Wage Inequality," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 519-562, October.
    27. Jérôme Gautié & Schmitt John, 2010. "Low-Wage Work in the Wealthy World," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00464352, HAL.
    28. Locke, Richard M. & Qin, Fei & Brause, Alberto, 2007. "Does monitoring improve labor standards? Lessons from Nike," LSE Research Online Documents on Economics 59405, London School of Economics and Political Science, LSE Library.
    29. David H. Autor & Susan N. Houseman, 2006. "Temporary Agency Employment: A Way Out of Poverty?," Book chapters authored by Upjohn Institute researchers, in: Rebecca M. Blank & Sheldon H. Danziger & Robert F. Schoeni (ed.),Working and Poor: How Economic and Policy Changes Are Affecting Low-Wage Workers, pages 312-337, W.E. Upjohn Institute for Employment Research.
    30. Michael C. Jensen & Kevin J. Murphy, 2010. "CEO Incentives—It's Not How Much You Pay, But How," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 64-76, January.
    31. Helper, Susan & MacDuffie, John Paul & Sabel, Charles, 2000. "Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(3), pages 443-487, September.
    32. John Paul Macduffie, 1995. "Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry," ILR Review, Cornell University, ILR School, vol. 48(2), pages 197-221, January.
    33. Susan Helper & Mari Sako, 2010. "Management innovation in supply chain: appreciating Chandler in the twenty-first century," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(2), pages 399-429, April.
    34. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    35. David C. Wyld, 2010. "ASecond Lifefor organizations?: managing in the new, virtual world," Management Research Review, Emerald Group Publishing Limited, vol. 33(6), pages 529-562, May.
    36. George A. Erickcek & Susan N. Houseman & Arne L. Kalleberg, 2003. "The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools," Book chapters authored by Upjohn Institute researchers, in: Eileen Appelbaum & Annette Bernhardt & Richard J. Murnane (ed.),Low-Wage America: How Employers Are Reshaping Opportunity in the Workplace, pages 368-403, W.E. Upjohn Institute for Employment Research.
    37. Jeffrey H Dyer & Wujin Chu, 2000. "The Determinants of Trust in Supplier-Automaker Relationships in the U.S., Japan and Korea," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(2), pages 259-285, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonin Bergeaud & Clement Malgouyres & Clement Mazet-Sonilhac & Sara Signorelli, 2021. "Technological change and domestic outsourcing," CEP Discussion Papers dp1784, Centre for Economic Performance, LSE.
    2. Nicola Gagliardi & Benoît Mahy & François Rycx, 2019. "Does firms’ position in global value chains matter for workers’ wages?. An overview with a gender perspective," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(4), pages 55-62.
    3. Nicola Gagliardi & Benoît Mahy & François Rycx, 2021. "Upstreamness, Wages and Gender: Equal Benefits for All?," British Journal of Industrial Relations, London School of Economics, vol. 59(1), pages 52-83, March.
    4. Sean O'Brady & Virginia Doellgast & David Blatter, 2024. "The high costs of outsourcing: Vendor errors, customer mistreatment, and well‐being in call centers," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 63(1), pages 80-103, January.
    5. Andrea Atencio De Leon & Claudia Macaluso & Chen Yeh, 2023. "Outsourcing Dynamism," Working Papers 23-64, Center for Economic Studies, U.S. Census Bureau.
    6. Alexandre Mas & Amanda Pallais, 2020. "Alternative Work Arrangements," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 631-658, August.
    7. Wouter Zwysen, 2024. "Working apart: Domestic outsourcing in Europe," European Journal of Industrial Relations, , vol. 30(2), pages 221-241, June.
    8. Christine A. Riordan & Alexander M. Kowalski, 2021. "From Bread and Roses to #MeToo: Multiplicity, Distance, and the Changing Dynamics of Conflict in IR Theory," ILR Review, Cornell University, ILR School, vol. 74(3), pages 580-606, May.
    9. Delgado, Mercedes & Mills, Karen G., 2020. "The supply chain economy: A new industry categorization for understanding innovation in services," Research Policy, Elsevier, vol. 49(8).
    10. Broten, Nicholas & Dworsky, Michael & Powell, David, 2022. "Do temporary workers experience additional employment and earnings risk after workplace injuries?," Journal of Public Economics, Elsevier, vol. 209(C).
    11. Eileen Appelbaum, 2017. "Domestic Outsourcing, Rent Seeking, and Increasing Inequality," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(4), pages 513-528, December.
    12. John Schmitt, 2017. "Comments on “Domestic Outsourcing, Rent Seeking, and Increasing Inequality†by Eileen Appelbaum," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(4), pages 529-533, December.
    13. Virginia Doellgast & Matthew Bidwell & Alexander J. S. Colvin, 2021. "New Directions in Employment Relations Theory: Understanding Fragmentation, Identity, and Legitimacy," ILR Review, Cornell University, ILR School, vol. 74(3), pages 555-579, May.
    14. Hammerling, Jessie HF, 2022. "Financial Drivers of Domestic Outsourcing: Case Study of Food Services in the San Francisco Bay Area," Institute for Research on Labor and Employment, Working Paper Series qt9sz919zw, Institute of Industrial Relations, UC Berkeley.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bernhardt, Annette & Batt, Rosemary & Houseman, Susan & Appelbaum, Eileen, 2016. "Domestic Outsourcing in the U.S.: A Research Agenda to Assess Trends and Effects on Job Quality," Institute for Research on Labor and Employment, Working Paper Series qt2fm4m444, Institute of Industrial Relations, UC Berkeley.
    2. Annette Bernhardt & Rosemary Batt & Susan Houseman & Eileen Appelbaum, 2016. "Working Paper: Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," CEPR Reports and Issue Briefs 2016-03, Center for Economic and Policy Research (CEPR).
    3. Deborah Goldschmidt & Johannes F. Schmieder, 2017. "The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1165-1217.
    4. Eileen Appelbaum, 2017. "Domestic Outsourcing, Rent Seeking, and Increasing Inequality," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(4), pages 513-528, December.
    5. Alona Bilokha & Sudip Gupta, 2024. "Shareholder litigation rights and firm productivity," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 33(2), pages 65-90, May.
    6. Tashlin Lakhani & Sarosh Kuruvilla & Ariel Avgar, 2013. "Across Boundaries: The Global Challenges Facing Workers and Employment Research 50th Anniversary Special Issue," British Journal of Industrial Relations, London School of Economics, vol. 51(3), pages 440-472, September.
    7. David H. Autor & Susan N. Houseman & Sari Pekkala Kerr, 2017. "The Effect of Work First Job Placements on the Distribution of Earnings: An Instrumental Variable Quantile Regression Approach," Journal of Labor Economics, University of Chicago Press, vol. 35(1), pages 149-190.
    8. Alexandre Mas & Amanda Pallais, 2020. "Alternative Work Arrangements," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 631-658, August.
    9. Rosemary Batt & Eileen Appelbaum, 2013. "The Impact of Financialization on Management and Employment Outcomes," Upjohn Working Papers 13-191, W.E. Upjohn Institute for Employment Research.
    10. Bernhardt, Annette, 2014. "Labor Standards and the Reorganization of Work: Gaps in Data and Research," Institute for Research on Labor and Employment, Working Paper Series qt3hc6t3d5, Institute of Industrial Relations, UC Berkeley.
    11. Adrian Gourlay & Jonathan Seaton, 2004. "The determinants of firm diversification in UK quoted companies," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2059-2071.
    12. Heinrich, Ralph P., 1999. "Complementarities in Corporate Governance - A Survey of the Literature with Special Emphasis on Japan," Kiel Working Papers 947, Kiel Institute for the World Economy (IfW Kiel).
    13. Baldwin, Carliss Y. & Bogers, Marcel L.A.M. & Kapoor, Rahul & West, Joel, 2024. "Focusing the ecosystem lens on innovation studies," Research Policy, Elsevier, vol. 53(3).
    14. Andres, Christian & Cumming, Douglas & Karabiber, Timur & Schweizer, Denis, 2014. "Do markets anticipate capital structure decisions? — Feedback effects in equity liquidity," Journal of Corporate Finance, Elsevier, vol. 27(C), pages 133-156.
    15. Davide Consoli & Pier Paolo Patrucco, 2011. "Complexity and the Coordination of Technological Knowledge: The Case of Innovation Platforms," Chapters, in: Handbook on the Economic Complexity of Technological Change, chapter 8 Edward Elgar Publishing.
    16. Ferrell, Allen & Liang, Hao & Renneboog, Luc, 2016. "Socially responsible firms," Journal of Financial Economics, Elsevier, vol. 122(3), pages 585-606.
    17. James Spletzer & Elizabeth Weber Handwerker, 2015. "The Role of Establishments and the Concentration of Occupations in Wage Inequality," Working Papers id:7427, eSocialSciences.
    18. Susan Helper & Mari Sako, 2010. "Management innovation in supply chain: appreciating Chandler in the twenty-first century," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(2), pages 399-429, April.
    19. Matthias Kiefer & Edward Jones & Andrew Adams, 2016. "Principals, Agents and Incomplete Contracts: Are Surrender of Control and Renegotiation the Solution?," CFI Discussion Papers 1603, Centre for Finance and Investment, Heriot Watt University.
    20. Dittmar, Amy & Mahrt-Smith, Jan, 2007. "Corporate governance and the value of cash holdings," Journal of Financial Economics, Elsevier, vol. 83(3), pages 599-634, March.

    More about this item

    Keywords

    Outsourcing; subcontracting; independent contractors; staffing services; earnings inequality; job quality; data limitations; managerial theory;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:upj:weupjo:16-253. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/upjohus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.