The bargaining position of low-skilled and high-skilled workers in a globalising world

Dumont, Michel; Rayp, Glenn; Willemé, Peter

doi:10.1016/j.labeco.2012.02.005

Cited by 31 publications

(19 citation statements)

References 46 publications

(74 reference statements)

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“…While Dumont et al (2012) show for Belgium that offshoring has indeed weakened the bargaining power of low-skilled workers, this paper provides evidence on the impact of offshoring on the skill structure of employment in manufacturing industries in Belgium over the period 1995-2007.…”

Section: Resultsmentioning

confidence: 70%

Offshoring and the Skill Structure of Labour Demand in Belgium

Hertveldt

Michel²

2013

De Economist

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A major concern regarding the consequences of offshoring is the worsening of the labour market position of low-skilled workers. This paper addresses this issue by providing evidence on the impact of offshoring on the skill structure of manufacturing employment in Belgium between 1995 and 2007. Offshoring is found to significantly lower the employment share of low-skilled workers. Its contribution to the fall in the employment share of low-skilled workers amounts to 35%. This is mainly driven by offshoring to Central and Eastern European countries. Moreover, our analysis contains three extensions with respect to the existing literature. First, while previous papers exclusively focus on materials offshoring, we show that offshoring of business services also contributes significantly to the fall in the low-skilled employment share. Second, according to our results, the widely used current price measures of offshoring underestimate the extent of offshoring and its impact on low-skilled employment. Finally, we find that the impact of offshoring on low-skilled employment is significantly smaller in industries with a higher ICT capital intensity. This result also implies that even if ICT capital facilitates offshoring, especially of business services, this does not lead to faster skill upgrading in industries with a high ICT capital intensity. Offshoring and the Skill Structure of Labour Demand in Belgium AbstractA major concern regarding the consequences of offshoring is the worsening of the labour market position of low-skilled workers. This paper addresses this issue by providing evidence on the impact of offshoring on the skill structure of manufacturing employment in Belgium between 1995 and 2007. Offshoring is found to significantly lower the employment share of low-skilled workers. Its contribution to the fall in the employment share of low-skilled workers amounts to 35%. This is mainly driven by offshoring to Central and Eastern European countries. Moreover, our analysis contains three extensions with respect to the existing literature. First, while previous papers exclusively focus on materials offshoring, we show that offshoring of business services also contributes significantly to the fall in the low-skilled employment share. Second, according to our results, the widely used current price measures of offshoring underestimate the extent of offshoring and its impact on low-skilled employment. Finally, we find that the impact of offshoring on low-skilled employment is significantly smaller in industries with a higher ICT capital intensity. This result also implies that even if ICT capital facilitates offshoring, especially of business services, this does not lead to faster skill upgrading in industries with a high ICT capital intensity.3

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Section: Resultsmentioning

confidence: 70%

Offshoring and the Skill Structure of Labour Demand in Belgium

Hertveldt

Michel²

2013

De Economist

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“…Similar effects do not show up in studies for the U.K. and Belgium by Brock and Dobbelaere (2006), Abraham et al (2009), andBoulhol et al (2011) (who use a growth accounting framework with no distinction between skill types and efficient wage bargaining rather than right-to-manage in order to identify union bargaining power). However, Dumont et al (2012) confirm negative effects of imports from and offshoring to low-wage countries on the bargaining power of low-skilled workers for Belgium.…”

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confidence: 71%

A North-South Trade Model of Offshoring and Unemployment

Arnold

Trepl

2015

Open Econ Rev

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This paper analyzes a North-South trade model with offshoring and unemployment due to union wage setting. A reduction in the cost of offshoring decreases employment in the North except possibly if there is little offshoring initially. If the scale of Northern firms also falls, then each Northern agent's welfare declines. Unions have an incentive to reduce their own bargaining power by strategically delegating wage negotiation so as to cushion the negative employment effects.

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“…On the other hand, high‐skilled TFWs and individuals from developed economies may have relatively low motivation to stay in Canada permanently because their skills are sought after internationally. The social and economic gains from transition to permanent residence may not be substantial relative to the gains from returning to the country of origin or moving to other countries (Ci, Hou, and Morissette ; Dumont, Rayp, and Willemé ). Consequently, the rates of stay for high‐skilled TFWs were low to moderate even though there were more available transition pathways for them than for low‐skilled TFWs.…”

Section: Conclusion and Discussionmentioning

confidence: 99%