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The Reallocation Effects of Domestic Outsourcing
This paper estimates the wage, employment, and reallocation effects of non-core activity outsourcing using Brazil’s unexpected 1993 court-ordered outsourcing legalization. We leverage North-South variation in pre-legalization court permissiveness and compare security guards to less affected occupations. We find that older incumbent security guards were adversely impacted through occupational layoffs, loss of firm-level wage premia, and exit from the occupation. At the same time, increased numbers of younger workers entered the formal sector and became employed at contract firms. On net, legalization increased guard employment by 5%, led by a 50% increase in employment for guards aged 18-24, and had no effect on demographically-adjusted guard wages. The observed labor reallocation effects are explained by the fact that contract firms persistently employ demographically different workers than direct employers.
Date:
14 November 2024, 16:00
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Skills Lab
Speaker:
Mayara Felix (Yale University)
Organising department:
Department of Economics
Part of:
Applied Microeconomics Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Edward Valenzano
