Outsourcing and skill-specific employment in a small economy: Austria and the fall of the Iron Curtain

Hartmut Egger () and Peter Egger

No 2000-24, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: We present a model, in which a small industrialised economy outsources part of its production into a small foreign country which is well endowed with low-skilled labour. We analyse under which conditions sinking trade costs stimulate outsourcing activities, thereby increasing the wage dispersion and, if labour markets are unionised, also the employment of high-skilled relative to low-skilled labour. For a panel of Austrian industries, we find first that decreasing trade barriers, which can be associated with the fall of the Iron Curtain, indeed stimulate outsourcing to Eastern Europe and the former Soviet Union, and second, that outsourcing to these countries significantly shifts relative employment in favour of high- skilled labour.

Keywords: fragmentation; skill-specific employment; simultaneous equations (search for similar items in EconPapers)
JEL-codes: C33 F14 F15 F16 (search for similar items in EconPapers)
Date: 2000-10
References: Add references at CitEc
Citations: View citations in EconPapers (58)

Downloads: (external link)
http://www.econ.jku.at/papers/2000/wp0024.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:jku:econwp:2000_24

Access Statistics for this paper

More papers in Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria Contact information at EDIRC.
Bibliographic data for series maintained by René Böheim ().