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The Impact of Outsourcing on the Japanese and South Korean Labor Markets: International Outsourcing of Intermediate Inputs and Assembly in East Asia

Author

Listed:
  • Ahn, Sanghoon
  • Fukao, Kyoji
  • 深尾, 京司
  • フカオ, キョウジ
  • Ito, Keiko
  • 伊藤, 恵子
  • イトウ, ケイコ

Abstract

Applying a common empirical approach to comparable industry-level data on production, trade, and labor markets for Japan and South Korea, this paper aims to investigate the impacts of outsourcing on different sectors of the labor market focusing on differences in educational attainment. While outsourcing measures used in previous studies only take account of the outsourcing of intermediate inputs, this paper, utilizing the Asian International Input-Output Tables, incorporates the outsourcing of assembly. The econometric results indicate that outsourcing to Asia (particularly to China) has a negative impact on the demand for workers with lower education and a positive impact on the demand for workers with higher education both in Japan and Korea. Moreover, the international outsourcing of assembly has a significant impact on skill upgrading, particularly in the Korean electrical machinery sector.

Suggested Citation

  • Ahn, Sanghoon & Fukao, Kyoji & 深尾, 京司 & フカオ, キョウジ & Ito, Keiko & 伊藤, 恵子 & イトウ, ケイコ, 2009. "The Impact of Outsourcing on the Japanese and South Korean Labor Markets: International Outsourcing of Intermediate Inputs and Assembly in East Asia," CEI Working Paper Series 2008-27, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2008-27
    Note: October, 2008
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/29302/WP2008-27.pdf
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    References listed on IDEAS

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    Cited by:

    1. Yoichi Arai & Hidehiko Ichimura & Daiji Kawaguchi, 2014. "The educational upgrading of Japanese youth, 1982-2007: Are Japanese youth ready for structural reforms?," Working Papers e078, Tokyo Center for Economic Research.
    2. KWON Hyeog Ug, 2012. "Offshoring of Japanese Small and Medium Enterprises (Japanese)," Discussion Papers (Japanese) 12004, Research Institute of Economy, Trade and Industry (RIETI).
    3. Arai, Yoichi & Ichimura, Hidehiko & Kawaguchi, Daiji, 2015. "The educational upgrading of Japanese youth, 1982–2007: Are all Japanese youth ready for structural reforms?," Journal of the Japanese and International Economies, Elsevier, vol. 37(C), pages 100-126.
    4. Fukao, Kyoji & Okubo, Toshihiro, 2011. "Why Has the Border Effect in the Japanese Machinery Sectors Declined?: The Role of Business Networks in East Asian Machinery Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 26, pages 651-671.

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    More about this item

    Keywords

    Outsourcing; labor demand; skill upgrading; Japan; Korea; manufacturing; Asian International Input-Output Tables;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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