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Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards

Bibliographic Data

ID3240499
AuthorsArindrajit Dube (Stockholm School of Economics), Ethan Kaplan (0000-0001-7364-9925, Stockholm University)
Year2010
Volume63
Issue2
Pages287-306
Publication date2010-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueIndustrial and Labor Relations Review (JOURNAL)
Journal identifiersISSN: 0019-7939 • E-ISSN: 2162-271X
PublisherSAGE Publications Inc (PUBLISHER)
DOI10.1177/001979391006300206
OpenAlexW1479909922
LanguageEN
Citations received57
References cited13

Outsourcing of labor services grew substantially during the 1980s and 1990s and was associated with lower wages, fewer benefits, and lower rates of unionization. The authors focus on two occupations for which they can identify outsourcing in those two decades using industry and occupation codes: janitors and guards. Across a wide array of specifications, they find that the outsourcing wage penalty ranged from 4% to 7% for janitors and from 8% to 24% for guards. Their findings on health benefits mirror those on wages. Evidence suggests that the outsourcing penalty was not due to compensating differentials for higher benefits or lower hours, skill differences, or the types of industries that outsourced. Rather, outsourcing seems to have reduced labor market rents for workers, especially for those in the upper half of the occupational wage distribution. Industries with higher historical wage premia were more likely to outsource service work

Business · Economic rent · Economics · Labour economics · Market economy · Outsourcing · Service (business) · Wage · Work (physics) · Employment and Welfare Studies · Engineering · Labor Movements and Unions · Marketing · Retirement, Disability, and Employment

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Unique citing works57
Citations per year4,38
Citation span2013 - 2026 (14)
Citation velocitycurrent
Highly citedNo
Citation typesNeutral: 53

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