Review of World Economics

, Volume 145, Issue 1, pp 57–73 | Cite as

Specialization, outsourcing and wages

Original Paper

Abstract

This paper studies the impact of outsourcing on individual wages. In contrast to the standard approach in the literature, we focus on domestic outsourcing as well as foreign outsourcing. We argue that if outsourcing is associated with specialization gains arising from an increase in the division of labor, domestic outsourcing tends to increase wages for both unskilled and skilled labor. We use a panel data set of workers in Danish manufacturing industries to show that domestic and foreign outsourcing affect wages as predicted.

Keywords

Outsourcing Comparative advantage Specialization Wages 

JEL Classification

F16 J31 C23 

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Copyright information

© Kiel Institute 2009

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of Copenhagen, CEBRFrederiksbergDenmark
  2. 2.Department of EconomicsCopenhagen Business School, IZA, CEBRFrederiksbergDenmark

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