The Impact of Trade and Outsourcing on Skilled and Unskilled Labour in France*

Esther Tsafack and Jaai Parasnis

No 32-10, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper investigates the effect of trade and outsourcing on demand for labour in France, including the role of exports. We analyse the impact of outsourcing - imported inputs - on unskilled labour in manufacturing industry during 1990-2002 and find that outsourcing has a significant negative effect on the relative demand for unskilled labour. This could be potentially mitigated by exports in manufacturing, which are found to increase the demand for unskilled labour. Our analysis of economy- wide impact of trade over 1970-2003 finds that imported goods and services, as well as total exports, contribute to the skilled-unskilled differential by increasing the demand for skilled labour. These trade variables, however, have no statistically significant impact on the demand for unskilled labour.

Keywords: International trade; outsourcing; skill differentials; production theory (search for similar items in EconPapers)
JEL-codes: F14 J31 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-05
New Economics Papers: this item is included in nep-int
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