Cutting hours through outsourcing

Olivier Godechot () and Ulysse Lojkine
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Olivier Godechot: Institut d'Études Politiques [IEP] - Paris, CRIS - Centre de recherche sur les inégalités sociales (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, AxPo - AxPo Observatory of Market Society Polarization - Sciences Po - Sciences Po
Ulysse Lojkine: AxPo - AxPo Observatory of Market Society Polarization - Sciences Po - Sciences Po, CRIS - Centre de recherche sur les inégalités sociales (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, Institut d'Études Politiques [IEP] - Paris

World Inequality Lab Working Papers from HAL

Abstract: We study the on-site outsourcing of low-skilled service tasks (cleaning, catering and security) with French matched employer-employee data from the period 2001-2019. In line with the existing literature, we find a substantial penalty of around 10 log points in the yearly earnings of the outsourced employees, that persists 7 years after treatment. In contrast to the literature, we find that it is almost entirely explained by a penalty in days worked in the year and in hours worked per week, with at most a modest contribution of the hourly wage. We also find negative effects on employment, as proxied both by the presence in the panel and the probability of receiving unemployment benefits. Interviews with various stakeholders in these industries indicate that cutting the hours on a given site is a common way to compete on prices for subcontractor firms, with the decline in hours leading to both work intensification and a decrease in quality.

Date: 2026-04
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