Discussion paper

DP6484 Winners and losers: A Micro-level Analysis of International Outsourcing and Wages

Our paper investigates the link between international outsourcing and wages utilizing a large household panel and combining it with industry level information on industries' outsourcing activities from input-output tables. This approach avoids problems such as aggregation bias, potential endogeneity bias and poor skill definitions that commonly hamper industry-level studies. We find that outsourcing has had a marked impact on wages. Applying two alternative skill classifications we find evidence that a one percentage point increase in outsourcing reduced the wage for workers in the lowest skill categories by up to 1.5% while it increased wages for high-skilled workers by up to 2.6%. This result is robust to a number of different specifications.

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Citation

Görg, H and I Geishecker (2007), ‘DP6484 Winners and losers: A Micro-level Analysis of International Outsourcing and Wages‘, CEPR Discussion Paper No. 6484. CEPR Press, Paris & London. https://cepr.org/publications/dp6484