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

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  • Diehl, Markus

Abstract

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.

Suggested Citation

  • Diehl, Markus, 1999. "The Impact of International Outsourcing on the Skill Structure of Employment: Empirical Evidence from German Manufacturing Industries," Kiel Working Papers 946, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:946
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    References listed on IDEAS

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    10. 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 540-546, August.
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    Citations

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    Cited by:

    1. Lorentowicz, Andzelika & Marin, Dalia & Raubold, Alexander, 2005. "Is Human Capital Losing from Outsourcing? Evidence for Austria and Poland," CEPR Discussion Papers 5344, C.E.P.R. Discussion Papers.
    2. em. Erkki Koskela & Rune Stenbacka, 2007. "Equilibrium Unemployment with Outsourcing and Wage Solidarity under Labour Market Imperfections," CESifo Working Paper Series 1988, CESifo Group Munich.
    3. Kleinert, Jörn, 2000. "Growing Trade in Intermediate Goods: Outsourcing, Global Sourcing or Increasing Importance of MNE Networks?," Kiel Working Papers 1006, Kiel Institute for the World Economy (IfW).
    4. Koskela, Erkki & Stenbacka, Rune, 2010. "Equilibrium unemployment with outsourcing and wage solidarity under labour market imperfections," European Economic Review, Elsevier, vol. 54(3), pages 376-392, April.
    5. A. Arrighetti & A. Ninni & E. Breda & R. Cappariello & M. Clemens & D. Schumacher, 2012. "Competitiveness in manufacturing. Germany vs. Italy – a comparison," Economics Department Working Papers 2012-EP01, Department of Economics, Parma University (Italy).
    6. Koskela, Erkki & Poutvaara, Panu, 2008. "Flexible Outsourcing and the Impacts of Labour Taxation in European Welfare States," IZA Discussion Papers 3699, Institute of Labor Economics (IZA).
    7. Koskela, Erkki & Stenbacka, Rune, 2007. "Equilibrium Unemployment with Outsourcing and Wage Solidarity Under Labour Market Imperfections," IZA Discussion Papers 2733, Institute of Labor Economics (IZA).
    8. Robert Anderton & Paul Brenton & Eva Oscarsson, 2002. "What’s trade got to do with it? Relative demand for skills within Swedish manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(4), pages 629-651, December.
    9. Ingo Geishecker, 2002. "Outsourcing and the Demand for Low-skilled Labour in German Manufacturing: New Evidence," Discussion Papers of DIW Berlin 313, DIW Berlin, German Institute for Economic Research.
    10. Gerling, Katja, 2000. "Subsidization and Structural Change in Eastern German Transition: Did Economic Policy Meet Its Objectives?," Kiel Working Papers 998, Kiel Institute for the World Economy (IfW).
    11. Lars Calmfors & Giancarlo Corsetti & Michael P. Devereux & Gilles Saint-Paul & mult. Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2008. "Chapter 3: The effect of globalisation on Western European jobs: curse or blessing?," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 71-104, February.

    More about this item

    Keywords

    International Outsourcing; Trade; Wages; Employment.;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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