Does offshoring reduce industry employment?

This paper looks at the implications of offshoring for industry employment whilst explicitly accounting for the scale and technology effects of offshoring. The effects of offshoring on employment are analysed using industry-level data for 17 high income OECD countries. Our findings indicate that offshoring has no effect or a slight positive effect on sectoral employment. Offshoring within the same industry (“intra-industry offshoring”) reduces the labour-intensity of production, but does not affect overall industry employment. Inter-industry offshoring does not affect labour-intensity, but may have a positive effect on overall industry employment. These findings suggest that the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production sites.international outsourcing, labour demand

Offshoring, Labour Market Institutions and the Elasticity of Labour Demand

This paper analyses the evolution of the elasticity of labour demand and the role of offshoring therein using industry-level data for a large number of OECD countries. The first main finding is that the wage elasticity of labour demand has increased substantially. The finding that employment has become increasingly sensitivity to wages is shown to be robust to a wide variety of econometric specifications of labour demand, although some of this association may reflect a trend increase in the speed of adjustment rather than an increase in the long-run wage elasticity. A second finding is that more intensive offshoring is associated with more elastic labour demand, consistent with increased offshoring having expanded the flexibility of firms to adjust the mix of domestic workers and foreign value-added in production when relative factor prices change. More in particular, the average elasticity of labour demand appears to be about 30% to 40% larger in absolute value than the counter-factual elasticity which would have prevailed had offshoring not been possible. Increases of this magnitude might well have important implications for job security and worker bargaining power. Finally, we find some evidence that strict employment protection legislation weakens the link between offshoring and higher labour demand elasticity. This suggests that the impact of offshoring on labour demand elasticity depends on the national institutional environment.Employment protection legislation, international outsourcing, labour demand, worker insecurity

To Search or Not to Search: Female Labor Supply Following Job Displacement

Following permanent layoffs most women search for and secure new jobs, but some withdraw from the labor force. In this paper, the authors develop a joint model of the choice to engage in post-displacement job search and the distribution of unemployment duration for searchers, and estimate the model using data from the Displaced Worker Survey. Estimates of the resulting "split-population" model show that labor force withdrawal is an important factor explaining the distribution of jobless spells for women.Female; Job Search; Labor Supply; Unemployment Duration; Unemployment; Women

Labor Market Equilibrium and Sun-belt-Frostbelt Earnings Gaps

In this paper, the authors estimate interregional earnings differentials using the May-June matched 1979 Current Population Survey. Several biases that may have been present in earlier studies are corrected by controlling for establishment size and job tenure, and by using a nonmetropolitan cost-of-living deflator for workers not residing in major metropolitan areas. Large and statistically-significant differentials in real earnings across regions are found, including a substantial earnings premium for workers in the expanding "sunbelt" states in the South and West. The authors interpret these gaps as indicating disequilibrium between "sunbelt" and "frostbelt" labor markets.

Union-Nonunion Earnings Differentials and the Decline of Private-Sector Unionism

Recent years have been difficult ones for the American labor movement. Especially during the past half-decade, the economic and political environment for unions has become increasingly hostile-dominated by a growing anti-union sentiment in manage ment; the adverse effects of industrial restructuring, import competition, deregulation, and high unemployment; and the tightening constraints of a labor law and NLRB enforcement mechanism that have become markedly less supportive of unions. These and other external changes, as well as some continuing internal weaknesses, have thrust unions into a period of declining union membership, eroding bargaining strength, repeated contract concessions, and what at least some observers have perceived as the beginning of a new era bindustrial relations (Thomas Kochan and Michael Piore, 1985; Edwards and Michael Podgursky, 1986)

Rural Displaced Workers Fare Poorly

Many workers, both rural and urban, were permanently laid off from their jobs between 1981 and 1986. Some found comparable jobs quickly, but others were jobless for 6 months or more, took a cut in pay to land a new job, or had to move away to find a new job. Overall, rural displaced workers fared more poorly than urban. Rural communities need to enhance the labor market flexibility of workers displaced by economic change

Job Training Lags for Rural Workers

Post-school training is an important component of the rural workforce skill development system, but, in 1991, just 40 percent of the nonmetro workforce had received training on their current jobs. Less educated, minority, and southern rural workers were particularly unlikely to he enhancing their skills. Between 1983 and 1991, the training rate for nonmetro workers rose modestly, but fell behind the more rapidly rising metro training rate, suggesting that fewer rural firms had adopted the high-skill production strategies widely believed to be of increasing importance for competitive success. Lower rural training reflects both the specialization of rural firms in more routine products and technologies and the cost disadvantages of rural firms and communities as suppliers of job training

Introduction to Special Issue on Rural Skills

This issue of Rural Development Perspectives reports key results from a comprehensive assessment of skill development among the rural workforce that was undertaken by the Economic Research Service (ERS). The main purpose for this assessment was to develop a solid factual foundation for assessing public and private initiatives to improve rural education and job training. Because rural communities and institutions show particular strengths, and weaknesses, some lessons for national efforts to improve workforce skills also emerge