Technological change and domestic outsourcing

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 tha...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc no. 264; pp. 0_1 - 75
Main Authors Antonin Bergeaud, Sara Signorelli, Clément Mazet-Sonilhac, Clément Malgouyres
Format Paper
LanguageEnglish
Published St. Louis OECD Publishing 15.11.2021
Federal Reserve Bank of St. Louis
Organisation for Economic Cooperation and Development (OECD)
SeriesOECD Social, Employment and Migration Working Papers
Subjects
Broadband
Employment
Expenditures
Firm Organisation
Internet
Labor costs
Labor market
Labour Market
Outsourcing
Productivity
Technological change
Technology adoption
Trends
Wages & salaries
Writers
France
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Summary: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.
ISSN:1815-199X
DOI:10.1787/e3b226da-en