Foreign outsourcing, labour demand and the choice of functional form

Journal of Applied Economics, 2006, vol. IX, pages 255-273

Abstract: Elasticity of the demand for low-skilled and high-skilled labour in the European Union with respect to foreign outsourcing is estimated, using alternative flexible cost functions. The choice of functional form is apparently not immaterial, as different forms can lead to conflicting conclusions. Tests that can help to discriminate between different forms of functional specification show that a traditional generalized Leontief cost function is often rejected in favour of a minflex Laurent generalized Leontief cost function. Overall, the estimation results show that foreign outsourcing had a significant impact on the demand for low-skilled and high-skilled workers in the sample period. The pattern is however industryspecific and suggests, in line with some recent theoretical models, an ambiguous relationship between outsourcing and labour demand. There is some evidence that high-skilled labour and capital are (relative) complements.

Keywords: foreign outsourcing; labour demand; flexible cost function specification (search for similar items in EconPapers)
JEL-codes: F16 C52 (search for similar items in EconPapers)

Downloads: (external link)
http://www4.cema.edu.ar/pjae/m/138Dumont200611 (application/pdf)
Access to full text is restricted to subscribers. Individual articles may be purchased through PayPal.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this article

Journal of Applied Economics is edited by Germán Coloma and Mariana Conte Grand and Jorge M. Streb

More articles in Journal of Applied Economics from Universidad del CEMA
Contact information at EDIRC.
Series data maintained by Valeria Dowding ().