a simple model of employment outsourcing, the primary implication of which is that firms will respond to externally … imposed firing costs by outsourcing positions requiring the least firm-specific skills rather than those with the highest …

Outsourced workers experience large wage declines, yet domestic outsourcing may raise aggregate productivity. To study … wage premia. Second, outsourcing raises output at the firm level. Third, contractors endogenously locate at the bottom of … the job ladder, implying that outsourced workers receive lower wages. Using firm-level instruments for outsourcing and …