Employment, Job Turnover and the Trade in Producer Services: Firm-Level Evidence

Hijzen, Alexander; Pisu, Mauro; Upward, Richard; Wright, Peter

doi:10.2139/ssrn.1032896

“…Their analysis is based on estimating labour demand equations using industry data for the UK. Using highly disaggregated firm level data on job creation and destruction, and firm level data on trade in services, Hijzen et al (2007) also fail to find any negative effects of services offshoring (measured as services imports).…”

Section: Introductionmentioning

confidence: 88%

Services offshoring and wages: evidence from micro data

Geishecker

¹

,

Görg

²

2011

Oxford Economic Papers

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Services offshoring and wages: Evidence from micro data Ingo Geishecker and Holger GörgAbstract: This paper investigates the effects of services offshoring on wages using individual level data combined with industry information on offshoring. Our results show that services ofsshoring affects the real wage of low and medium skilled individuals negatively. By contrast, skilled workers benefit from services offshoring in terms of higher real wages. Hence, offshoring has contributed to a widening of the wage gap between skilled and less skilled workers. This result is obtained while controlling for individual and sectoral observed and unobserved heterogeneity. In particular, our empirical model also controls for the impact of technological change and offshoring materials.

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“…They also find a negligible negative effect on employment at the finest level of disaggregation possible, an effect that disappears if a more aggregate classification is used. Using similar techniques but more disaggregated data on employment dynamics for UK firms, Hijzen et al (2007) also concludes there is little evidence for a negative effect of offshoring of services. Indeed, they observe that firms that engage in offshoring have more rapid employment growth than other firms.…”

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confidence: 95%

Services Trade and Policy

François

¹

,

Hoekman

²

2010

Journal of Economic Literature

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Services Trade and Policy Joseph Francois University of Linz and CEPR Bernard Hoekman World Bank and CEPR December 2009Abstract: Since the mid-1980s a substantial body of research has taken shape on trade in services. Much of this is inspired by the WTO and regional trade agreements. However, an increasing number of papers focus on the impacts of unilateral services sector liberalization. The literature touches on important linkages between trade and FDI in services and the general pattern of productivity growth and economic development. This paper surveys the literature on services trade, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade, and efforts to cooperate to achieve such liberalization through trade agreements. There is increasing evidence that services liberalization is a major potential source of gains in economic performance, including productivity in manufacturing and the coordination of activities both between and within firms. The performance of service sectors, and thus services policies, may also be an important determinant of trade volumes, the distributional effects of trade, and overall patterns of economic growth and development. At the same time, services trade is also a source of increasing political unease about the impacts of globalization on labor markets, linked to worries about offshoring and the potential pressure this places on wages in high income countries.JEL codes: F1, F2, F5, L80

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“…Since service outsourcing generally covers a wide variety of different functions, including also non-knowledge-intensive services like caretaker activities or security services, the results achieved in those studies can only give a first hint on what one might expect when it comes to outsourcing of knowledge intensive IT services. Hijzen et al (2007) are among the first to provide firm-level evidence for the impact of service offshoring on employment. They find no evidence that the imports of intermediate services are associated with job losses.…”

Section: Background Discussionmentioning

confidence: 99%

IT Outsourcing and Employment Growth at the Firm Level

Ohnemus

¹

2010

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10-108.pdf Non-Technical SummaryIn the short run, outsourcing is usually associated with the resulting job losses in the contract granting firm, since in-house staff is generally laid-off or transferred to the outsourcing provider. However, the medium and long run effects of outsourcing on employment growth might still be positive. As recent research has revealed, outsourcing can lead to substantial improvements in firm performance which may in turn result in competitive advantages for these firms. A stronger market position boosts additional demand for the products and services offered by outsourcing firms which thereby eventually enables them to raise employment in order to satisfy this positive demand shift. This paper analyses the outsourcing of information technologies (IT) and its effect on medium-term subsequent firm-level employment growth in Germany. IT outsourcing is a special case of outsourcing and it can be seen as the practice of turning over all or at least parts of an organisation's IT functions to an outside vendor. Recently assembled representative results for Germany indicate that more than 78 percent of firms with five or more employees are involved in IT outsourcing. During the last decade, the latter has beyond doubt become an integral part of corporate strategy for German firms.The data stems from the ZEW ICT surveys conducted in 2004 and 2007 in the German manufacturing and selected service industries. More than 1 100 observations are available for the empirical analysis. Firm growth refers to the period from 2003 to 2006 and is based on the (firm-level) employment figures measured for both time periods. IT outsourcing describes whether the firm has outsourced at least one of the following three basic IT services to an external service provider: installation of hard-and software, computer system maintenance, user assistance and support. Due to the fact that IT outsourcing firms may also be the ones that are more successful in general, for instance due to unobservable firm characteristics such as managerial abilities, this study takes account of endogeneity by employing a two stage instrumental variable approach.The study finds evidence that IT outsourcing has a positive effect on firms' employment growth rate. Dividing the sample into manufacturing and service firms, however, a mediumterm positive growth effect of IT outsourcing can only be observed f...

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Employment, Job Turnover and the Trade in Producer Services: Firm-Level Evidence

Cited by 24 publications

References 29 publications

Services offshoring and wages: evidence from micro data

Services offshoring and wages: evidence from micro data

Services Trade and Policy

IT Outsourcing and Employment Growth at the Firm Level

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