MIDDLE EAST TECHNICAL UNIVERSITY

Department of Economics Seminar Series 

"“Skill-biased Wage Effect of Domestic Outsourcing”"

by

Eren Gürer

(Middle East Technical University)

Date: November 18, 2024 (Monday)

Time: 14:00

Place: F106, FEAS - Building A

Abstract

This paper examines the impact of domestic outsourcing—contracting with another domestic firm for goods or services—on the wages of workers performing the outsourced tasks. Using the Entrepreneurship Information System (EIS), an administrative employee-employer linked dataset, we refine the strategy of Goldschmidt and Scheuer (2017) for identifying the outsourcing events. Our dataset incorporates buyer-supplier transactions, allowing us to confirm that a relationship between the contracting and the contractor firm begins following the outsourcing event. This improves our ability to identify various types of outsourcing beyond low-skilled on-site outsourcing. We use an event study design and employ an imputation-based differences-in-differences technique on a sample of matched treated and control workers to estimate the impact of such events on the wages of outsourced workers. Our findings suggest that workers performing low-skilled tasks, such as food preparation, cleaning, security, and logistics, lose from domestic outsourcing, while workers performing high-skilled tasks benefit.