International Outsourcing and Wage Rigidity
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Daniel Horgos
In industrialized economies, International Outsourcing is often blamed for destroying jobs and thus, inducing unemployment. Since most contributions examining International Outsourcing assume flexible wages, they do not address these concerns directly. This paper adopts a rigid wage approach and investigates the differences occurring. As theoretical results and the empirical panel data estimations for Germany show, effects depend on industry aggregation, the industry's skill intensity, and the labor market institution. Only in industries characterized by wage rigidity, outsourcing significantly increases low skilled unemployment. Consequently, not International Outsourcing but inflexible labor market institutions instead should be blamed for destroying low skill jobs.
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Article
- International Outsourcing and Wage Rigidity
- The Impact of Basel III on Emerging Economies
- Product Quality, Trade, and Adjustment: The China-ASEAN Experience
- Trends of Trade Interdependence and Prolifiration of FTAs in Asia: 1980-2010
- Stabilization Policy in an Economy with Two Exchange Rate Regimes
- Choice or Mimetism in the Decision to Migrate? A European Illustration
- What's New in Our World?
- Learning by Exporting in Turkey: An Investigation for Existence and Channels
- Have Migrants Bought a "Round Trip Ticket"? Determinants in Probability of Immigrants' Return in Spain
