Summaries of Outsourcing Works

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In their article Outscouring Types, Relative Wages, and the Demand for Skilled Workers: New Evidence from the U.S. Manufacturing Aekapol Chongvilaivan, Jung Hur and Yohanes E. Ryianto analyse the impacts of outsourcing on relative wages of firm workers. The concept of outsourcing implies that firms contract out some level of production in the vertical chain of production. The authors claims that there is a relationship between outsourcing types and relative wages of skilled and unskilled workers. In fact, the researchers thesis claim that downstream materials and service outsourcing are influenced by worker skill, while upstream materials outsourcing is not. First, the authors divide the concept of outsourcing in three categories. The first type consist of upstream material outsourcing. A firm doing so will outsource the production of inputs for a good. The second type consists of downstream production in which firms outsource the production of the final product. The third type consists of service outsourcing sectors such as communications, accounting, auditing , bookkeeping and computer services. The authors explain that each type require different levels of skills for labour. Therefore, they do not have the same impact on demand for skilled labour. Before conducting their study, the authors reviewed previous literature on the topic. An influential study to the authors research is one written by Blum in 2007. This reviewed literature showed that shifts of structures in the economy industries could explain the rising wages for skilled workers. Another influential literature studied by the researchers is one study conducted by Amiti and Weu (2006). This study evaluated the impacts of contracting out on the productivity in the United-States. Amiti and Weu (2006) explain that if firms are able to internationally fragment the inefficient parts of their production process by outsourcing, they can then specialise in the part of the production...
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