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Is labor flexibility a substitute to offshoring? Evidence from Italian manufacturing

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  • Andrea F. Presbitero
  • Matteo G. Richiardi
  • Alessia A. Amighini

Abstract

We test whether labor flexibility acts as a substitute to delocalization. Using Italian survey data, we show that a higher share of temporary workers appears to reduce the likelihood of future offshoring. However, once reverse causality and spurious correlation are controlled for with IV techniques, the relationship vanishes. This finding suggests that a solid argument that labor flexibility and offshoring are substitutes has still to be made.

Suggested Citation

  • Andrea F. Presbitero & Matteo G. Richiardi & Alessia A. Amighini, 2015. "Is labor flexibility a substitute to offshoring? Evidence from Italian manufacturing," International Economics, CEPII research center, issue 142, pages 81-93.
    • Handle: RePEc:cii:cepiie:2015-q2-142-6
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    More about this item

    Keywords

    Offshoring; Labor flexibility; Temporary work; Delocalization; Labor market reforms;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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