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Wiley InterScience | |||||||||||||||||||||
  Review of International EconomicsVolume 15 Issue 1, Pages 188 - 205 Published Online: 2 Oct 2006 © 2010 Blackwell Publishing Ltd International Economics and Finance Society
Abstract | References | Full Text: HTML, PDF (Size: 123K) | Related Articles | Citation Tracking  International Outsourcing, Technological Change, and Wage Inequality * I would like to thank Bob Anderton, Rod Falvey, Holger Gorg, Bob Hine, Udo Kreickemeier, Daniel Mirza, Doug Nelson, Michael Pfaffermayr, an anonymous referee, and participants of the ETSG (2002), RES Annual Conference (2003), EEA Annual Congress (2003), and the workshop on outsourcing in Innsbruck (2003) for helpful comments and suggestions. All remaining errors are my own. Financial support from the ESRC (PTA-026-27-0733) and Leverhulme Trust (F114/BF) is gratefully acknowledged. Copyright © 2006 The Author; Journal compilation © 2006 Blackwell Publishing Ltd Abstract
This paper analyzes the impact of international outsourcing on UK wage inequality during the 1990s by applying the mandated wage approach proposed by Feenstra and Hanson (1999). The methodology is extended in order to obtain additional insight into the relative importance of the factor and sector bias of international outsourcing and technological change. The results indicate that technological change is the predominant force behind the increase in wage inequality, but international outsourcing also contributed significantly. In explaining the increase in wage inequality the factor bias of technological change was slightly larger than its sector bias, while for international outsourcing the sector bias was much more important. The relative importance of the two effects hinges crucially on the estimated rate of productivity passthrough. | 
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IT'S TIME TO RENEW
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