This research paper investigates the link between international outsourcing and wages utilising a large household panel and combining it with industry level information on industries outsourcing activities from input-output tables. By doing so one can arguably overcome the potential aggregation bias as well as other shortcomings that affect industry level studies. They find that outsourcing has had a marked impact on wages. Distinguishing three skill categories to find evidence that outsourcing reduced the real wage for workers in the lowest skill categories by up to 1.8% while it increased real wages for high-skilled workers by up to 3.3%.
International outsourcing as a topic for study still excites curiosity from academic and practitioners judging from the recent volume being written and sound bytes produced by both parties. However, the jury is still out as to whether it is a valid strategy and generates net positive, sustained economic outcomes. This paper is most concerned with the latter part of the previous statement: can international services outsourcing be sustained through the mechanism of wages and innovation? If international services outsourcing can be shown to enhance innovation, there is a case to be made for its continuity as a strategy.
This paper presents evidence describing the effect of international outsourcing of materials and services inputs on plant level productivity based on plant level data. The paper suggests that there are positive effects from outsourcing of both types of inputs. Overall, this paper suggests that plant level heterogeneity is important in evaluating the productivity effects of international outsourcing.