Outsourcing Policy and Worker Outcomes: Causal Evidence from a Mexican Ban

Alejandro Estefan (), Roberto Gerhard (), Joseph Kaboski (), Illenin Kondo () and Wei Qian ()
Additional contact information
Alejandro Estefan: University of Notre Dame
Roberto Gerhard: Secretaría del Trabajo y Previsión Social
Joseph Kaboski: University of Notre Dame, CEPR, NBER
Illenin Kondo: Federal Reserve Bank of Minneapolis
Wei Qian: Haverford College

No 18566, IZA Discussion Papers from IZA Network @ LISER

Abstract: Using Mexican economic census data from 1994 to 2019, we document a rising trend in domestic outsourcing, particularly among large firms, and a negative association between outsourcing and labor compensation, including profit sharing and social security. We leverage higher-frequency data from a manufacturing panel survey, matched employer-employee data, and a ban on domestic outsourcing in 2021 to show that the ban reduced outsourcing, increased labor's share, and reduced markdowns without raising total labor costs or affecting employment, output, or productivity. We propose a theoretical model in which corporate fiscal incentives drive outsourcing and account for the observed empirical patterns.

Keywords: markdowns; monopsony; outsourcing; developing countries (search for similar items in EconPapers)
JEL-codes: J38 J42 J81 M55 O15 (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-lma
References: Add references at CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp18566.pdf (application/pdf)

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

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp18566

Access Statistics for this paper

More papers in IZA Discussion Papers from IZA Network @ LISER Contact information at EDIRC.
Bibliographic data for series maintained by Mark Fallak ().