Outsourcing and the US Labour Market

31 Pages Posted: 28 Feb 2011

See all articles by S. Amer Ahmed

S. Amer Ahmed

World Bank

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Terrie Louise Walmsley

Purdue University - Center for Global Trade Analysis

Date Written: February 20, 2011

Abstract

There is worldwide concern about the vulnerability of the current labour force to displacement by future imported services. In the USA, some have suggested that as much as one-third of the workforce might be vulnerable to such outsourcing. However, the labour market impacts of this displacement are difficult to assess using purely analytical or statistical approaches. In this paper, simulation methods are used to understand how sensitive the US economy and labour market are to increases in services imports. Specifically, the scenario examined assumes that the share of imported services in total employment increases from 0.8 per cent to 7.25 per cent over a time horizon in which workers are unable to change occupations. In response, it is found that all industries increase their use of imported services and their use of the composite input that is comprised of imported services and tradable labour. With the exception of legal workers, all workers in tradable occupations experience declines in their real wages. Demand for non-tradable occupations labour rises in the industries that expand the most, while demand falls in shrinking industries. The non-tradable occupations that are used intensively in the shrinking industries experience declines in real wages, while the real wages rise for workers in non-tradable occupations used intensively in the expanding industries.

Suggested Citation

Ahmed, S. Amer and Hertel, Thomas W. and Walmsley, Terrie Louise, Outsourcing and the US Labour Market (February 20, 2011). The World Economy, Vol. 34, No. 2, pp. 192-222, 2011, Available at SSRN: https://ssrn.com/abstract=1772438 or http://dx.doi.org/10.1111/j.1467-9701.2010.01297.x

S. Amer Ahmed (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis ( email )

Department of Agricultural Economics
1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4199 (Phone)
765-494-9176 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

Terrie Louise Walmsley

Purdue University - Center for Global Trade Analysis ( email )

1145 Krannert Building
West Lafayette, IN 47907
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
1,146
PlumX Metrics