IDEAS home Printed from https://ideas.repec.org/p/wfo/wpaper/y2006i272.html
   My bibliography  Save this paper

International Outsourcing and Labour with Sector-specific Human Capital

Author

Listed:
  • Kurt Kratena

    (WIFO)

Abstract

This paper attempts to quantify the impact of outsourcing on production patterns and the labour market in a two-sector specific-factors model with skilled labour (specific factor) and unskilled labour (mobile factor). Outsourcing can be compared to the case, where trade liberalisation leads to trade in final goods and a change in relative prices. In the latter case a downward pressure on the wage rate for skilled labour in one sector and a wage rise for skilled labour in the other sector indicate significant adjustment costs, whereas with outsourcing an outcome of rising wage rates for skilled labour in both sectors is feasible. The full impact of outsourcing depends on the relative weight of the "factor savings" and the "cost savings" effect. The negative impact on the unskilled wage rate is similar in both cases and depends on the macroeconomic relevance of the respective shocks.

Suggested Citation

  • Kurt Kratena, 2006. "International Outsourcing and Labour with Sector-specific Human Capital," WIFO Working Papers 272, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2006:i:272
    as

    Download full text from publisher

    File URL: https://www.wifo.ac.at/wwa/pubid/26423
    File Function: abstract
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Greenaway & Michelle Haynes & Chris Milner, 2002. "Adjustment, employment characteristics and intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 254-276, June.
    2. Mary Lovely & Douglas Nelson, 2002. "Intra-industry trade as an indicator of labor market adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 179-206, June.
    3. Arndt, Sven W., 1997. "Globalization and the open economy," The North American Journal of Economics and Finance, Elsevier, vol. 8(1), pages 71-79.
    4. Deardorff, A.V., 1998. "Fragmentation Across Cones," Working Papers 427, Research Seminar in International Economics, University of Michigan.
    5. Davis, Donald R, 1998. "Does European Unemployment Prop Up American Wages? National Labor Markets and Global Trade," American Economic Review, American Economic Association, vol. 88(3), pages 478-494, June.
    6. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 207-228, June.
    7. Brecher, Richard A., 1974. "Optimal commercial policy for a minimum-wage economy," Journal of International Economics, Elsevier, vol. 4(2), pages 139-149, May.
    8. Neary, J Peter, 1978. "Short-Run Capital Specificity and the Pure Theory of International Trade," Economic Journal, Royal Economic Society, vol. 88(351), pages 488-510, September.
    9. Egger, Hartmut & Falkinger, Josef, 2003. "The distributional effects of international outsourcing in a 2 x 2 production model," The North American Journal of Economics and Finance, Elsevier, vol. 14(2), pages 189-206, August.
    10. Donald R. Davis, 1996. "Does European Unemployment Prop up American Wages?," NBER Working Papers 5620, National Bureau of Economic Research, Inc.
    11. Kohler, Wilhelm, 1991. "Income distribution and labor market effects of Austrian pre- and post-Tokyo-round tariff protection," European Economic Review, Elsevier, vol. 35(1), pages 139-154, January.
    12. Wilhelm Kohler, 2004. "Aspects of International Fragmentation," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 793-816, November.
    13. repec:bla:germec:v:4:y:2003:i:1:p:89-120:a is not listed on IDEAS
    14. Wilhelm Kohler, 2003. "The Distributional Effects of International Fragmentation," German Economic Review, Verein für Socialpolitik, vol. 4(1), pages 89-120, February.
    15. Kohler, Wilhelm, 2001. "A specific-factors view on outsourcing," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 31-53, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thede, Susanna, 2012. "A Simple Model of Trade, Job Task Offshoring and Social Insurance," Working Papers 2012:16, Lund University, Department of Economics.
    2. Wilhelm Kohler, 2007. "The Bazaar Effect, Unbundling of Comparative Advantage, and Migration," CESifo Working Paper Series 1932, CESifo.
    3. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    4. Zeddies, Götz, 2010. "International Trade Patterns and Labor Markets – An Empirical Analysis for EU Member States," IWH Discussion Papers 15/2010, Halle Institute for Economic Research (IWH).
    5. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," Thesis Commons bmxag, Center for Open Science.
    6. Goetz Zeddies, 2012. "International trade patterns and labour markets – an empirical analysis for EU member states," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 96-115.
    7. Wilhelm Kohler, 2002. "Aspects of International Fragmentation," Economics working papers 2002-08, Department of Economics, Johannes Kepler University Linz, Austria.
    8. ERLAT Guzin & ERLAT Haluk, 2010. "Intra-Industry Trade and Labour Market Adjustment in Turkey," EcoMod2003 330700049, EcoMod.
    9. Victor Kummritz, 2015. "Global Value Chains: Benefiting the Domestic Economy?," IHEID Working Papers 02-2015, Economics Section, The Graduate Institute of International Studies.
    10. Nathalie Chusseau & Michel Dumont, 2012. "Growing Income Inequalities in Advanced," Working Papers hal-00993359, HAL.
    11. Omar Bamieh & Francesco Bripi & Matteo Fiorini, 2022. "Services trade and labor market outcomes: Evidence from Italian firms," Review of International Economics, Wiley Blackwell, vol. 30(3), pages 673-701, August.
    12. Hartmut Egger & Josef Falkinger, 2003. "The Role of Public Infrastructure for Firm Location and International Outsourcing," CESifo Working Paper Series 970, CESifo.
    13. Wilhelm Kohler, 2002. "The Distributional Effects of International Fragmentation," Economics working papers 2002_01, Department of Economics, Johannes Kepler University Linz, Austria.
    14. Wilhelm Kohler, 2003. "Factor Price Frontiers with International Fragmentation of Multistage Production," Economics working papers 2003-05, Department of Economics, Johannes Kepler University Linz, Austria.
    15. Horgos Daniel, 2012. "International Outsourcing and Wage Rigidity," Global Economy Journal, De Gruyter, vol. 12(2), pages 1-28, June.
    16. Nathalie Chusseau & Michel Dumont & Joël Hellier, 2008. "Explaining Rising Inequality: Skill‐Biased Technical Change And North–South Trade," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 409-457, July.
    17. Amador, João & Cabral, Sónia, 2008. "International fragmentation of production in the Portuguese economy: What do different measures tell us?," MPRA Paper 9783, University Library of Munich, Germany.
    18. Amador, João & Cabral, Sónia, 2009. "Vertical specialization across the world: A relative measure," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 267-280, December.
    19. Richard Frensch & Jan Hanousek & Evžen Kocenda, 2012. "Incomplete Specialization and Offshoring across Europe," CESifo Working Paper Series 3809, CESifo.
    20. Eppinger, Peter S., 2019. "Service offshoring and firm employment," Journal of International Economics, Elsevier, vol. 117(C), pages 209-228.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wfo:wpaper:y:2006:i:272. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Florian Mayr (email available below). General contact details of provider: https://edirc.repec.org/data/wifooat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.