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Trade in business services has been attracting attention from academic researchers, policy makers, and business journalists. While there are many anecdotes, there has been little in the way of formal theory applied to this issue. In this paper, we adapt a general model of fragmentation of...
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to contracting firms. For this end we develop a new method for identifying outsourcing of food, cleaning, security and … growth of domestic outsourcing in Germany since the early 1990s. Event-study analyses show that wages in outsourced jobs fall … associated with outsourcing stem from a loss of firm-specific rents, suggesting that labor cost savings are an important reason …
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