OUTSOURCING TYPES, RELATIVE WAGES, AND THE DEMAND FOR SKILLED WORKERS: NEW EVIDENCE FROM U.S. MANUFACTURING

doi:10.1111/j.1465-7295.2008.00131.x

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Wiley InterScience

Economic Inquiry

Volume 47 Issue 1, Pages 18 - 33

Published Online: 17 Apr 2008

A Journal of the Western Economic Association International

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OUTSOURCING TYPES, RELATIVE WAGES, AND THE DEMAND FOR SKILLED WORKERS: NEW EVIDENCE FROM U.S. MANUFACTURING

AEKAPOL CHONGVILAIVAN ¹ , JUNG HUR ² and YOHANES E. RIYANTO ³*

¹ Chongvilaivan: Research Fellow, Department of Economics, National University of Singapore, AS2, 1 Arts Link, Singapore 117570. Phone +65-6516-4524, Fax +65-6775-2646, E-mail ecsac@nus.edu.sg
² Hur: Associate Professor, Department of Economics, Sogang University, Shinsu-dong, Mapogu, Seoul, 121-742, Republic of Korea. Phone +82-2-705-8179, Fax +82-2-705-8180, E-mail ecsjhur@sogang.ac.kr
³ Riyanto: Assistant Professor, Department of Economics, National University of Singapore, AS2, 1 Arts Link, Singapore 117570. Phone +65-6516-6939, Fax +65-6775-2646, E-mail ecsrye@nus.edu.sg

*We gratefully thank two anonymous referees for helpful comments. The first author would also like to further thank participants at the Asia Pacific Trade Seminars 2007 for thoughtful discussions.

ABSTRACT

Existing studies on the impact of outsourcing on relative wages and the demand for skilled workers mainly focus on aggregate outsourcing, in which imported intermediate inputs are used as a proxy. We depart from the existing studies by focusing on various types of outsourcing based on the six-digit NAICS U.S. manufacturing data. We show that downstream materials and service outsourcing are skill biased, whereas upstream materials outsourcing is not. We also produce other supplementary results pertaining to the impact of technology, different capital inputs on relative wages, and the demand for skilled workers. (JEL C33, F14, F15)

Online Early publication April 17, 2008

DIGITAL OBJECT IDENTIFIER (DOI)

10.1111/j.1465-7295.2008.00131.x About DOI