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Labor Market Effects of Bounds on Domestic Outsourcing

Author

Listed:
  • Jiménez, Bruno

    (Princeton University)

  • Rendon, Silvio

    (Inter-American Development Bank)

Abstract

We investigate the labor market effects of putting bounds to domestic outsourcing in Peru. A series of difference-in-differences specifications for individuals with high versus low predicted propensities to be outsourced show evidence of non-negative labor market effects. Limiting domestic outsourcing increases labor force participation by 1.5 percentage points and employment by 2.3 percentage points while it reduces unemployment by 0.8 percentage points, but has no statistically significant impact on labor formality nor real wages. Our results suggest that a policy of restricting outsourcing does neither destruct jobs nor does it improve workers' labor market conditions in the short-run.

Suggested Citation

  • Jiménez, Bruno & Rendon, Silvio, 2022. "Labor Market Effects of Bounds on Domestic Outsourcing," IZA Discussion Papers 15692, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15692
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Doruk Cengiz & Arindrajit Dube & Attila Lindner & David Zentler-Munro, 2022. "Seeing beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 203-247.
    4. Adrien Bilal & Hugo Lhuillier, 2021. "Outsourcing, Inequality and Aggregate Output," NBER Working Papers 29348, National Bureau of Economic Research, Inc.
    5. Adrien Bilal & Hugo Lhuillier, 2021. "Outsourcing, Inequality and Aggregate Output," Working Papers 2021-05, Becker Friedman Institute for Research In Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    domestic outsourcing; employment;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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