A Bird’s Eye View of International Outsourcing: Data, Measurement and Labour Demand Effects

This paper takes stock of the rapidly expanding literature on international outsourcing. The first part of the paper discusses the appropriateness of different data sources and measures that may be used to document the extent of international outsourcing. In the author’s view, input-output tables are to be preferred in most cases, although it is acknowledged that the choice of data and measurement ultimately rests on the specific question at hand. The issues are illustrated using input-output data for the United Kingdom, for the period 1974-1995. The second part of the paper concentrates on the labour-demand effects of international outsourcing. It starts off by describing the basic methodology and subsequently reviews the empirical evidence for a number of industrialised countries. The author concentrates specifically on the impact of international outsourcing on the skill structure of labour demand. While it may be expected that all types of labour suffer from outsourcing, most studies find that unskilled workers bear most of the burden.