IT Outsourcing and Employment Growth at the Firm Level

33 Pages Posted: 28 Mar 2011

See all articles by Jörg Ohnemus

Jörg Ohnemus

Centre for European Economic Research (ZEW)

Date Written: December 27, 2010

Abstract

Outsourcing is widely associated with accompanied job losses in the outsourcing firm, at least in the short run. However, the medium and long run effects of outsourcing on employment growth might still be positive. This paper particularly focuses on IT outsourcing and its medium-term effects on employment growth. Therefore, a three year time period from 2003 to 2006 is analysed using German firm-level data and instrumental variable estimation. I find evidence that IT outsourcing has a positive effect on firms’ employment growth rate. However, dividing the sample into manufacturing and service firms, a medium-term positive growth effect of IT outsourcing can only be observed for firms operating in the service sector.

Keywords: Information and Communication Technology, Outsourcing, Employment Growth

JEL Classification: L86, L24, L25, J21

Suggested Citation

Ohnemus, Jörg, IT Outsourcing and Employment Growth at the Firm Level (December 27, 2010). ZEW - Centre for European Economic Research Discussion Paper No. 10-108, Available at SSRN: https://ssrn.com/abstract=1791566 or http://dx.doi.org/10.2139/ssrn.1791566

Jörg Ohnemus (Contact Author)

Centre for European Economic Research (ZEW) ( email )

D-68034 Mannheim
Germany

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