Abstract
This paper studies the impact of outsourcing on individual wages in three European countries with markedly different labour market institutions: Germany, the UK and Denmark. To do so we use individual level data sets for the three countries and construct comparable measures of outsourcing at the industry level, distinguishing outsourcing by broad region. Estimating the same specification on different data show that there are some interesting differences in the effect of outsourcing across countries. We discuss some possible reasons for these differences based on labour market institutions.
Highlights
Over the last years globalisation and its alleged negative effects for the distribution of income, unemployment, poverty and social cohesion has caused immense publicI
Globalisation in the form of intensified international trade and, in particular, international outsourcing of production, has a deep structural impact fostering the specialisation of open economies in industries where they possess a comparative advantage
International specialisation is expected to yield significant efficiency gains improving the welfare of open economies
Summary
Over the last years globalisation and its alleged negative effects for the distribution of income, unemployment, poverty and social cohesion has caused immense public. I. Geishecker Georg-August-Universitat Gottingen, Germany, and Aarhus School of Business, Aarhus, Denmark H. Gorg Kiel Institute for the World Economy, Christian-Albrechts-Universitat Kiel, Germany, and CEPR, London, UK anxiety in Europe, against the backdrop of eastern enlargement of the European Union. Globalisation in the form of intensified international trade and, in particular, international outsourcing of production, has a deep structural impact fostering the specialisation of open economies in industries where they possess a comparative advantage. Less competitive industries on the other hand shrink. International specialisation is expected to yield significant efficiency gains improving the welfare of open economies.
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