Outsourcing and the Demand for Low-skilled Labour: Exemplary Evidence from German Manufacturing Industries

Part of the Applied Econometrics Association Series book series (AEAS)


During the past decades, the fortunes of less skilled workers have deteriorated substantially in most OECD countries. In the United States, the United Kingdom and various other countries, low-skilled workers have experienced large decreases in their relative earnings when compared with those of high-skilled workers (see OECD, 1994). For Germany however empirical evidence on the development of the relative earnings position of low-skilled workers is not conclusive. Blau et al. (1997), Christensen and Schimmelpfennig (1998) and Fitzenberger (1999) find mixed evidence. Estimation of the change in the relative earnings position of low-skilled workers seems to be sensitive to the definition of educational categories, the differentiation between production and non-production workers, and to the data set. However German unemployment and employment trends for low-skilled workers are far clearer and mirror somewhat the development of relative earnings in the United States and the United Kingdom. Reinberg (2001) reports that, while the overall German unemployment rate increased between 1976 and 1998 from around 4 per cent to almost 9 per cent, the increase for less skilled workers without any vocational training was from around 6 per cent to over 23 per cent. These figures are confirmed by Christensen and Schimmelpfennig (1998) who report that, while the average unemployment rate for low-skilled workers increased from 9.8 per cent (1983–89) to 13 per cent (1992–95), the average unemployment rate for high-skilled workers only increased from 2.3 per cent to 3.4 per cent and for medium-skilled workers from 4.5 per cent to 5.6 per cent respectively.


Cost Share Intermediate Good Intermediate Input Relative Demand Import Penetration 
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