Technological Change and Domestic Outsourcing

79 Pages Posted: 7 Aug 2021

See all articles by Antonin Bergeaud

Antonin Bergeaud

Banque de France

Clément Mazet-Sonilhac

Banque de France; Collège de France; SciencesPo - Sciences Po - Department of Economics

Clément Malgouyres

Institut des politiques publiques (PSE)

Sara Signorelli

University of Amsterdam

Abstract

Domestic outsourcing has grown substantially in developed countries over the past two decades. This paper addresses the question of the technological drivers of this phenomenon by studying the impact of the staggered diffusion of broadband internet in France during the 2000s. Our results confirm that broadband technology increases firm productivity and the relative demand for high-skill workers. Further, we show that broadband internet led firms to outsource some non-core occupations to service contractors, both in the low and high-skill segments. In both cases, we find that employment related to these occupations became increasingly concentrated in firms specializing in these activities, and was less likely to be performed in-house within firms specialized in other activities. As a result, after the arrival of broadband internet, establishments become increasingly homogeneous in their occupational composition. Finally, we provide suggestive evidence that high-skill workers experience salary gains from being outsourced, while low-skill workers lose out.

JEL Classification: G14, G21, O33

Suggested Citation

Bergeaud, Antonin and Mazet-Sonilhac, Clément and Malgouyres, Clément and Signorelli, Sara, Technological Change and Domestic Outsourcing. IZA Discussion Paper No. 14603, Available at SSRN: https://ssrn.com/abstract=3900865 or http://dx.doi.org/10.2139/ssrn.3900865

Antonin Bergeaud (Contact Author)

Banque de France ( email )

Paris
France

Clément Mazet-Sonilhac

Banque de France ( email )

Paris
France

Collège de France ( email )

11 Place Marcelin Berthelot
Paris, 75231
France

SciencesPo - Sciences Po - Department of Economics ( email )

28, rue des Saints-Pères
Paris, Paris 75007
France

Clément Malgouyres

Institut des politiques publiques (PSE) ( email )

48 boulevard Jourdan
Paris, 75014
France

Sara Signorelli

University of Amsterdam

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