تاثیر برون سپاری بین المللی بر امنیت شغلی فردی: تجزیه و تحلیل در سطح خرد

The paper analyzes how international outsourcing affected individual employment security. The analysis is carried out at the micro-level, combining monthly spell data from household panel data and industry-level outsourcing measures. By utilizing micro-level data, problems such as aggregation and potential endogeneity bias, as well as crude skill approximations that regularly hamper industry level displacement studies, can be reduced considerably. The main finding is that international outsourcing significantly lowers individual employment security. Interestingly, the effect does, however, not differ between high-, medium-, and low-skilled workers but only varies with job duration.

International outsourcing and its alleged negative labor market effects are raising increasing public concern, especially against the backdrop of the EU's eastern enlargement. In the public debate, the predominant view appears to be that international outsourcing severely threatens domestic employment security particulary for low-skilled workers, a view supported largely by anecdotal evidence. However, in the academic literature it is far from consensual what the concrete labor market impacts of international outsourcing actually are. This study focuses on the German labor market, which is an interesting case, being not only the largest economy in Europe, but also far more open to international trade than, for instance, the US. Furthermore, political and economic transition in the formerly communist Central and Eastern European countries during the 1990s now allows for intensive production-sharing with these economies at Germany's doorstep, with potentially sweeping implications for the German labor market. Over recent years, a number of theoretical contributions such as Feenstra and Hanson (1996a), Arndt, 1997 and Arndt, 1999, Deardorff, 2000 and Deardorff, 2002, Jones and Kierzkowski (2001) and Kohler (2004), to mention only a few, have highlighted the importance of international outsourcing for determining labor demand for different skill groups. However, the theoretical literature is not conclusive with regard to the labor market effects of international outsourcing. Depending on the models' assumptions and framework, international outsourcing can raise or lower relative demand for low-skilled workers. Furthermore, all of the aforementioned models assume that labor market adjustments are achieved by sufficiently flexible wages. Although this may be justifiable in the long run, in the medium and short run, especially in a country such as Germany, wages might be fairly rigid. If this is the case, then labor market adjustments to international outsourcing have to be achieved mainly through changes in employment (see Krugman, 1995). At the same time, the aforementioned models generally abstract from adjustment costs, thus labor can move costlessly between different areas of economic activity in response to international outsourcing. However, as authors such as Davidson and Matusz (2004) convincingly show, if displaced workers experience spells of unemployment and in some cases have to be re-trained, short-run adjustment costs can consume a significant part of the overall gains from international trade. Accordingly, albeit unquestioned efficiency gains, what also matters for the welfare effects of international outsourcing is how, and how fast the labor force adjust to changing patterns of international specialisation. The focus of the present paper is therefore on the impact of international outsourcing on the short run labor markets dynamics. More specifically, the paper will address the questions of how international outsourcing affects the individual risk of leaving employment and of how the impact of outsourcing may vary with skill and employment duration.

The paper expands the existing literature by analyzing the effects of international outsourcing for individual employment security in a micro-econometric framework utilizing a large panel of individual monthly employment spell data and controlling for the duration dependence of employment security. The approach is suitable to considerably reduce the aggregation and potential endogeneity bias that hampers existing industry-level displacement studies. Furthermore, individual-level data are arguably better suited to describe individual skills than the manual vs. non-manual worker skill approximation that is commonly used in the literature. Our main findings are that workers with less than seven months of employment duration face the highest risk of leaving employment. Afterwards, employment security monotonically increases over time. Furthermore, international outsourcing, when narrowly defined, is found to have a marked impact on individual employment security. Remarkably, the effect does not differ statistically between high-, medium- and low-skilled workers. This is an interesting result as it poses a contrast to the findings of industry-level studies that typically identify low-skilled workers to be more adversely effected than high skilled workers by outsourcing (e.g., Feenstra and Hanson, 1996a, Feenstra and Hanson, 1996b and Egger and Egger, 2003).24 Similarly, with regard to technological progress we find only uniform negative effects for individual employment security across different skill groups. At first sight this stark discrepancy between industry-level findings on relative employment effects of international outsourcing and technological change and our micro-level results is puzzling. However, while industry-level studies are concerned with partial equilibrium net effects we look at the dynamics of the adjustment process in response to international outsourcing (and technological change). Authors such as Swaim and Podgursky (1989) and Farber (1997) show that the probability of finding reemployment is increasing in the level of educational attainment. A finding that is also confirmed for Germany by authors such as Hunt (1995), Steiner (2001) and Uhlendorff (2004). This suggests that the skill-biased effects of technological change and international outsourcing that have been found for Germany in aggregated industry-level studies (e.g.,Falk and Koebel, 2002 and Geishecker, 2006) are indirect and related to the lower probability of low-skilled workers to reenter employment.