Events

Prof. Raffaele Saggio
Assistant Professor of Economics
University of British Columbia

This paper exploits a novel identifier of outsourcing in Italian matched employer-employee administrative data to provide several new findings on outsourcing. First, outsourcing is more widespread than previously thought, with over two-thirds of workers being outsourced to a non-business-service firm. Second, using an event-study design together with a matched sample of outsourced and non-outsourced workers, we find that outsourcing has large and persistent negative consequences for workers’ earnings — mostly because of job loss. Third, although the average worker loses from outsourcing, the effects vary by industry. For example, restaurant workers are among the most negatively affected, while technology workers may even benefit from outsourcing, suggesting that the outsourcing motive may matter for the effects on workers. Our evidence is consistent with some Italian firms using outsourcing to bypass the strict employment protection legislation of the country.