The effects of offshoring on the elasticity of labor demand

Does International Outsourcing Really Lower Workers’ Income?

“…These findings are in line with empirical evidence as shown by Slaughter (2001), Hasan et al (2007) and Senses (2010).…”

“…In an early study Feentsra and Hanson (1999) show the wage reducing effect for low-skilled workers in the United States over the period 1979-1990. Senses (2010, also using U.S. data, provides empirical evidence of an increasing wage elasticity and thus for a wage moderating effect of outsourcing.…”

Is labor flexibility a substitute to offshoring? Evidence from Italian manufacturing

“…The empirical evidence broadly supports this view (Görg et al, 2008;Daveri and Jona-Lasinio, 2008;Hijzen et al, 2010;Jabbour, 2010). However, higher productivity comes at the cost of higher demand elasticities for production workers (Sensen, 2010), increasing job instability (Geishecker, 2008;Lo Turco et al, 2013), broadening wage inequality due to the increase in the relative demand for skilled workers (Feenstra andHanson, 1996,1999;Broccolini et al, 2011), and higher unemployment in presence of imperfect intersectoral labor mobility (Mitra and Ranjan, 2010). As for what concerns non-production workers, the effects of offshoring are reported to depend on the workers' skills (the demand for high skills increases, while that for low skills decreases), as well as on other characteristics of the foreign supplier (Tomiura et al (2013), for Japanese firms).…”

International trade and economic insecurity

“…that being able to move manufacturing processes offshore makes firms more responsive to domestic labor costs. An analysis using establishment-level data for the US manufacturing sector between 1972 and 2001 provides strong evidence that offshoring causes firms to become more responsive to the labor costs of blue-collar workers, both in the short and long term [3]. Similarly, a strong cross-sectional association between higher labor demand elasticities and higher average offshoring intensity is documented for a set of 11 OECD countries over the period 1980−2002 [4].…”