Working Paper Series, Department of Economics, Copenhagen Business School
Jakob Roland Munch and Jan Rose Skaksen
Specialization, Outsourcing and Wages
Abstract: 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. By using a simple
theoretical model, we argue that, if outsourcing is associated with
specialization gains arising from an increase in the extent of the market
for intermediate goods, 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
outsurcing affect wages as predicted by the theory.
Keywords: Outsourcing; Comparative advantage; Specialization; Wages; (follow links to similar papers)
JEL-Codes: C23; F16; J31; (follow links to similar papers)
24 pages, November 13, 2006
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