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Offshoring, Inshoring and Labor Market Volatility
Author(s) -
FosterMcGregor Neil,
Pöschl Johannes
Publication year - 2015
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/asej.12052
Subject(s) - offshoring , volatility (finance) , economics , wage , labour economics , destinations , monetary economics , business , outsourcing , financial economics , tourism , marketing , political science , law
Using sectoral data from the World Input‐Output Database, this paper considers the impact of offshoring and inshoring on the volatility of employment and wage growth. Our results indicate that inshoring has a positive impact on sectoral employment volatility, while offshoring has a negative impact. Additional results indicate that much of the positive volatility effect of inshoring is found to occur in countries in East Asia and the EU 12, regions that are important destinations for offshoring activities. Conversely, the negative volatility effect of offshoring is found to occur mainly in EU 15 and ‘Other’ countries, which consists of developed countries that are relatively intensive offshorers. We also present results to suggest that firms smooth employment fluctuations by offshoring, and that such smoothing tends to be concentrated on low‐educated and medium‐educated workers.