Firm-level effects of offshoring of materials and services on relative labor demand

Based on firm-level data over the period 1997–2002 for the Swedish manufacturing sector the objective of this paper is to analyze relative labor demand effects due to offshoring, separating between materials and services offshoring and also geographical location of trade partner. Overall, our results give no support to the fears that offshoring of materials or services lead to out-location of high-skilled activity in Swedish firms. Rather, this paper finds evidence that the aggregate effects from offshoring lead to increasing relative demand of high-skilled labor, mainly due to services offshoring to middle income countries.     

ICT,offshoring, and the demand for part-time workers: The case of Japanese manufacturing

This paper examines the effects of information and communication technology (ICT) and offshoring on the skill demand in Japanese manufacturing. One of the contributions of this paper is that we focus explicitly on the demand for low-wage part-time workers, which we call low skilled workers. Estimating a system of variable factor demands for the period 1980–2011, we find that industries with higher ICT stock shifted demand from middle-low to middle-high and low skilled workers. Offshoring is associated with the increasing demand for high skilled workers but it has insignificant effects on the demand for middle-high, middle-low, and low skilled workers. The results together suggest that the increasing demand for low-wage part-time workers can be attributable to ICT in Japan.     

Offshoring and the Skill Structure of Labour Demand in Belgium

A major concern regarding the consequences of offshoring is the worsening of the labour market position of low-skilled workers. This paper addresses this issue by providing evidence on the impact of offshoring on the skill structure of manufacturing employment in Belgium between 1995 and 2007. Offshoring is found to significantly lower the employment share of low-skilled workers. Its contribution to the fall in the employment share of low-skilled workers amounts to 35 %. This is mainly driven by offshoring to Central and Eastern European countries. While most of the previous papers on this subject focus on materials offshoring, we show that offshoring of business services also contributes significantly to the fall in the low-skilled employment share. As a complement to the existing literature, we compare the widely used current price measure of offshoring with a constant price measure that is based on a deflation with separate price indices for domestic output and imports. This reveals that the former underestimate the extent of offshoring and its impact on low-skilled employment. Finally, we also find that the impact of offshoring on low-skilled employment is significantly smaller in industries with a higher ICT capital intensity.     

Global Innovative R&D Offshoring with Heterogeneous Labor: The Role of IPR‐Protection on Technology Transfer and the Brain Drain Effect

Using a North–South framework, this study proposes a theoretical general equilibrium model with multiple Northern firms offshoring innovative R&D to the South. Northern firms vary in their ability to manage Southern researchers, and Southern researchers vary in quality. Southern researchers of higher quality are more productive but also more likely to leave the firm and start a competing firm through imitation of the product. A strengthening of Southern IPR‐protection increases offshoring, global welfare, and innovation while eliminating employment opportunities for skilled Southern researchers. Therefore, stronger Southern IPR‐protection has the potential to contribute to the emigration of highly qualified researchers. The model then predicts the effects of changes to the Northern country as a result of this increased emigration. Increases in Northern technology increase offshoring and innovation while decreasing the amount of technology transferred. The effect of an increase in Northern researcher quality depends on the degree of the increase in productivity as a result of the higher quality workers.     

Labour-Market Outcomes of Older Workers in the Netherlands: Measuring Job Prospects Using the Occupational Age Structure

This paper analyses changes in job opportunities of older workers in the Netherlands in the period 1996–2010. The standard human capital model predicts that, as a result of human capital obsolescence, mobility becomes more costly when workers become older. We measure and interpret how changing job opportunities across 96 occupations affect different age and skill groups. Older workers end up in shrinking occupations, in occupations with a lower share of high-skilled workers, in occupations facing a higher threat of offshoring tasks abroad, more focus on routine-intensive tasks and less rewarding job content. This process is not only observed for the oldest group of workers, but for workers aged 40 and above. Observing older workers in declining occupations is to a large extent a market outcome, but declining job opportunities in terms of less satisfying working conditions and job tasks and content could potentially raise incentives to retire early.     

Trade,technology, and the labour market: impacts on wage inequality within countries

This paper focuses on the widening wage inequality between skilled and unskilled workers within countries and discusses whether trade and technology have contributed to this trend. The paper develops an analytical framework for wage inequality that traces the determinants and their relative roles in wage inequality in different stages of the development of trade theory, especially those considering new evidence after 2011. We find that technology plays a key role in the rise of wage inequality in most countries, while trade plays an increasingly crucial and more complex role in recent years. Skill supply institutions, such as education systems supplying skilled labour or unions participating in wage‐setting processes, suppress the rise of wage inequality in some countries. The paper further outlines the mechanisms through which trade affects wage inequality, including offshoring, firm heterogeneity, labour market frictions and global value chains. We find that trade has indirect effects on technology, which further enlarges the wage inequality among skills. The paper also discusses the policy implications of the impacts of trade and technology on wage inequality.     

Offshoring,wages, and heterogeneity

Considering heterogeneous responses by skill group to material and service offshoring, we examine the relationship between offshoring and the individual wages of workers in the U.S. labor market. We find that offshoring has been beneficial for high-skill workers but detrimental for middle- and low-skill workers. In particular, service offshoring, which has been widespread since 2000, has severely affected the labor market, compared to material offshoring.     

Labour markets during apartheid in South Africa1

Anecdotal evidence shows that despite extensive restrictions on the hiring of African workers, these workers were increasingly employed in semi‐skilled occupations throughout the apartheid era. This article shows that White skill acquisition throughout the apartheid era reduced the supply of White semi‐skilled workers and led to the removal of job reservation, the process of reserving skilled and semi‐skilled jobs for Whites. Although job reservation declined, there is little evidence of a decline in racial segregation in the labour market. It is concluded that the transformation in the labour market was driven by White economic incentives rather than any evident change in White preferences regarding racial segregation.     

产业结构调整下的广州市技能人才需求预测分析

金融危机对广州的传统制造业产生了较大的冲击,调整产业结构,提升创新能力是当前摆脱危机,实现经济新一轮增长的重要途径。在此过程中,技能人才的供给是广州三次产业战略调整的直接制约因素。尤其随着广州产业结构调整节奏的逐步加快,其对技能人才的市场需求将与三次产业的产值结构相匹配而趋于刚性。因此,合理预测广州三次产业发展中对技能人才的需求,增加技能人才的供给能力,是广州产业结构调整中的重要问题。     

Foreign-affiliate presence and skilled labour demand

This paper investigates the effect of inward foreign investment on the relative employment of skilled labour. The extensive review of the empirical evidence shows that the results seem to be country-specific. Using Canadian industry-level panel data, the paper shows that most Canadian industries have experienced skill upgrading, and that foreign investment, as measured by FDI or majority ownership, has contributed to this development. Moreover, notwithstanding higher regulatory restrictions on foreign investment into Canadian services industries, foreign investment has had a similar impact on skill upgrading across both the services and non-services sectors. Finally, offshoring is found to only have a positive significant impact on skill upgrading in the services sector.     

Offshoring and the skill structure of labour demand

In this paper we examine the link between international outsourcing—or offshoring—and the skill structure of labour demand for a sample of 40 countries over the period 1995–2009. The paper uses data from the recently compiled World Input–Output Database to estimate a system of variable factor demand equations. These data allow us to exploit both a cross-country and cross-industry dimension and split employment into three skill categories. Our results indicate that while offshoring has impacted negatively upon all skill levels within industries, the largest impacts have been observed for medium-skilled workers. Such results are consistent with recent evidence indicating that medium-skilled workers have suffered to a greater extent than other skill types in recent years.     

Trade liberalization and wage inequality: Evidence from Korea

This paper investigates the heterogeneous income distribution effects of trade liberalization using Korean survey data from years of 2000–2015. Following the Stolper-Samuelson theorem most of previous research studying the effects of trade liberalization on wage differences focus on workers’ characteristics (e.g., skilled or unskilled) while heterogeneity within the same worker group has not been yet substantially investigated. To fill this gap, this paper provides empirical evidence of wage inequality across firms within the same group of workers caused by trade liberalization, potentially implied in the new-new trade models with firm heterogeneity. Employing a difference-in-differences (DID) specification, we find that the wages of unskilled workers in Korea have increased since its FTAs with more advanced countries, such as members of EU and the US, came into effect, while the effects on the wages of skilled workers are negative but not statistically significant. We also show that wage effects are heterogeneous across firms within unskilled and skilled worker groups, while the positive effects are statistically significant and largest for unskilled workers in medium-large sized firms. These findings are in line with both traditional and new-new trade models.     

Offshoring and working hours adjustments in a within-firm labor market

Although a growing body of literature identifies the within-firm redistribution effects of trade, research on the adjustment processes in within-firm labor markets remains scarce. This study analyzes the within-firm adjustment of working hours and wages by considering workers’ educational background and gender in response to a change in offshoring. Matched worker–firm panel data in the Japanese manufacturing sector covering 1998 to 2014 are used. The analysis leads to the following three observations. First, offshoring does not significantly alter the skill premium and gender gap in terms of scheduled monthly salaries and scheduled hourly wages. Second, offshoring decreases skill premium in annual hourly wages, whereas it increases gender gap in annual salaries. Third, this uneven impact on annual variables arises from the different changes in overtime working hours: college graduates work longer with a lower overtime premium, whereas female workers do not increase overtime work.     

Two‐Way Outsourcing,International Migration,and Wage Inequality

This article develops a general equilibrium model with a vertical production structure to examine the relationship between offshore outsourcing and international migration, especially emphasizing their effects on the wages of skilled and unskilled workers. Two‐way outsourcing (simultaneous insourcing and outsourcing) in skilled‐labor–intensive services arises because of product differentiation and scale economies, and outsourcing in unskilled‐labor–intensive processing occurs because of factor endowment differences. The tractability of the model allows us to rank outsourcing and migration, according to the wages of both types of workers. Finally, we also analyze under what conditions outsourcing and international migration are complements or substitutes.     

Education and the labour market in Botswana

Using primary data from a 1993/4 Household Income and Expenditure Survey in Botswana, this article presents empirical results on occupational attainment, its determinants, and the extent of filtering down in Botswana's labour market, given changes in labour market conditions over time. It was found that the Botswana labour market has been characterised by some ‘filtering down’ of educated workers into less skilled jobs as the supply of skilled manpower exceeded demand. Those who entered the labour market earlier, those with more education, those located in the urban areas and male workers are more likely to occupy jobs that are higher up in the hierarchy than to be in an unskilled blue-collar job. Jobs higher up in the hierarchy are also more rewarding financially. The article shows that there is occupational segregation of workers by gender in Botswana's labour market in that female workers are generally confined to a narrow range of occupations. The policy implications are that employment creation has to be pursued vigorously and the issue of gender discrimination investigated further.     

服务业离岸外移的经济效应分析

在服务业离岸业务快速增长的前提下,发达国家与发展中国家关于服务业离岸外移效应问题的争论日益激烈。利用制造业离岸外包的理论模型对服务业离岸业务的经济效应进行分析,可以证明,服务业离岸业务对发达国家就业的消极影响是非常小的,从长期看反而可以增加其对技术型工人的相对需求,即服务业离岸业务可以带来服务业务输出国和服务业务承接国的经济增长和福利提高。     

Specialization, outsourcing and wages

This paper studies the impact of outsourcing on individual wages. In contrast to the standard approach in the literature, we focus on domestic outsourcing as well as foreign outsourcing. We argue that if outsourcing is associated with specialization gains arising from an increase in the division of labor, domestic outsourcing tends to increase wages for both unskilled and skilled labor. We use a panel data set of workers in Danish manufacturing industries to show that domestic and foreign outsourcing affect wages as predicted.      

Occupational Mobility during South Africa's Industrial Take‐Off

In the absence of historical income or education data, the change in occupations over time can be used as a measure of mobility. This paper investigates intergenerational occupational mobility using a novel genealogical dataset for settler South Africa, spanning its transition from an agricultural to an early industrialised society (1800‐1909). We identify fathers and sons for whom we have complete information on occupational attainment. We follow a two‐generation discrete approach to measure changes in both absolute and relative mobility over time. Consistent with qualitative evidence of a shift away from agriculture as the economy's dominant sector, we see the farming class shrinking and the skilled and professional classes growing. Controlling for changes in the structure of the labour market over time, we find increasing mobility, becoming significant after the discovery of minerals in 1868. We find this mobility particularly for semi‐skilled workers but virtually no improved mobility for sons of farmers. We also test hypotheses related to the mobility prospects for first‐born sons and sons of immigrants.     

中国承接服务外包中的FDI因素研究

在经济全球化背景下,跨国公司归核化战略和全球价值链的建立带动了全球分工的深化和创新,出现了产品内分工。FDI和外包作为跨国公司离岸分工的两种模式,对东道国/承接国来说既可能出现替代关系也可能出现互补关系。同时,国际服务外包作为服务业离岸转移的一种重要形式已经成为世界服务业现代化、全球化发展的趋势。为此,本文在比较分析外包和FDI的经济效应及其对东道国/承接国影响的基础上,通过实证研究发现,当前外资是推动我国承接服务外包的一个重要动力,即在中国,FDI与服务外包属于互补关系而非替代关系。由此,结合当前中国引进FDI面临的新形势,笔者认为,中国应当积极利用FDI来推动服务外包的发展,从而实现国内产业结构的顺势升级。     

DEVELOPING EMPLOYMENT EFFECTS OF INNOVATIONS: MICROECONOMETRIC EVIDENCE FROM TAIWAN

This paper aims to identify the effects of innovation on employment and labor composition in Taiwan. Using a new and detailed firm‐level data set, the empirical results determine that innovations, measured by R&D investments or patent counts, have a positive impact on employment. Both of the estimated employment effects of product and process innovations are overall significantly positive. Although the effects of process innovations differ between high and low R&D‐intensive industries, the process innovation tends to expand the firms’ output and then increase employment for high R&D‐intensive industries. However, it frequently results in laborsavings in terms of production work and reduces jobs in low R&D‐intensive industries. Moreover, technological innovations are found to be non‐neutral, leading to a shift in labor composition in favor of skilled and more educated workers.