Keywords: Outsourcing, Productivity, Exporter, Plant-Level, and Multinational
Abstract: This paper examines the differences in characteristics between outsourcers and
non-outsourcers with a particular focus on productivity. The measure of
outsourcing comes from a question in the 1987 and 1992 Census of Manufactures
regarding plant-level purchases of foreign intermediate materials. There are
two key findings. First, outsourcers are "outstanding." That is, all else
equal, outsourcers tend to have premia for plant and firm characteristics,
such as being larger, more capital intensive, and more productive.
One exception to this outsourcing premia is that wages tend to be the same
for both outsourcers and non-outsourcers. Second, outsourcing firms, but not
plants, have significantly higher productivity growth.
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Last update: March 9, 2006