Jacob Funk Kirkegaard

Outsourcing and Offshoring: Pushing the European Model Over the Hill, Rather than Off the Cliff!

Offshoring and offshore outsourcing is increasingly affecting the EU-15, both in the manufacturing and services sectors. While no official statistics exist for the scope of the phenomenon, industry experts and press surveys point to a relatively limited extent of perhaps up to 2 percent of the workforce as affected. Offshoring and offshore outsourcing, similar to other trade, creates both domestic winners and losers. The EU-15 countries have the potential to become net beneficiaries from offshoring and offshore outsourcing, if they go ahead and implement the EU Lisbon Agenda with respect to labor market reforms and worker-skill upgrading. Furthermore, EU governments should take steps to promote the mobility of the workforce by increasingly linking social benefits to the willingness to move for work, thereby combating their archipelago of high unemployment enclaves, and to reform EU regional aid by shifting it from infrastructure spending to human capital investment.

OFFSHORING, OUTSOURCING AND PRODUCTION RELOCATIONS — LABOR MARKET EFFECTS IN THE OECD AND DEVELOPING ASIA

This paper evaluates data validity of available empirical sources and the extent of services sector labor market impact of offshoring in the US, EU-15 and Japan. A three-tier data validity hierarchy is identified, while the employment impact of offshoring in the three regions is found to be limited. Correspondingly, developing Asia is unlikely to experience large-scale employment gains as a destination region. Instead, the crucial role of domestic entrepreneurs in the growth of the Indian IT-related services industry is highlighted, as are the twin educational challenges facing developing Asia: the need to improve both primary and higher education simultaneously.

Toward a Sunny Future? Global Integration in the Solar Pv Industry

Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies. This paper analyzes the global integration of the solar photovoltaic (PV) sector and looks in detail at the industry’s recent growth patterns, industry cost structure, trade and investment patterns, government support policies and employment generation potential. In order to further stimulate both further growth of the solar industry and local job creation without constructing new trade and investment barriers, we recommend the following: (1) Governments must provide sufficient and predictable long-term support to solar energy deployment. Such long-term frameworks bring investments forward and encourage cost cutting and innovation, so that government support can decrease over time. A price on carbon emissions would provide an additional long-term market signal and likely accelerate this process. (2) Policymakers should focus not on solely the manufacturing jobs in the solar industry, but on the total number of jobs that could possibly be created including those in research, project development, installation, operations and maintenance. (3) Global integration and broader solar PV technology deployment through lower costs can be encouraged by keeping global solar PV markets open. Protectionist policies risk slowing the development of global solar markets and provoking retaliatory actions in other sectors. Lowering existing trade barriers—by abolishing tariffs, reducing non-tariff barriers and harmonizing industry standards—would create a positive policy environment for further global integration.

Offshoring in Europe - Evidence of a Two-Way Street from Denmark

Based on a large Danish survey of companies in tradable goods and services sectors, this working paper presents the results of offshoring and its impact on jobs, adding new perspectives to the globalization debate. Globalization entails a cross-border flow of jobs, but contrary to the mainstream media portrayal of globalization, it is not a one-way but a two-way street. In 2002–05 more jobs were created as a result of offshoring of activities into eastern Denmark from companies outside Denmark (i.e., inshored to Denmark) than were eliminated due to offshoring from companies in the Danish region. Overall, the employment effects of both offshoring and inshoring were found to be limited to less than 1 percent of all jobs either lost to offshoring or gained via inshoring. For Denmark, the worries in purely numerical terms regarding the employment effects of globalization seem overly alarmist. However, the trends revealed in the study do pose challenges for low-skilled workers—the group most negatively affected—and for highly skilled specialists, who face pressure to constantly upgrade their skills. Policy implications can be drawn in view of our results to ensure that labor markets are able to meet the demands of globalizing firms.

Structural and Cyclical Trends in Net Employment over US Business Cycles, 1949-2009: Implications for the Next Recovery and Beyond

This paper expands on the methodology of Groshen and Potter (2003) for studying cyclical and structural changes in the US economy and analyzes the net structural and cyclical employment trends in the US economy during the last 10 trough-to-trough business cycles from 1949 to the present. It illustrates that the US manufacturing sector and an increasing number of services sectors, including parts of the financial services sector, are experiencing structural employment declines. Structural employment gains in the US labor market are increasingly concentrated in the healthcare, education, food, and professional and technical services sectors and in the occupations related to these industries. The paper concludes that the improved operation of the US labor market during the 1990s has reversed itself in the 2000s, with negative long-term economic effects for the United States.

Beyond job losses

Purpose – The purpose of this paper is to assess the impact of offshoring and inshoring on the demand for different types of labor.Design/methodology/approach – The paper uses a survey with 1,500 firms located in the Eastern part of Denmark to identify overall offshoring and inshoring trends. Estimates of the employment impact are founded on data from a sub‐sample of firms with offshoring and/or inshoring.Findings – The paper shows that in the period 2002‐2005 more jobs were created as a result of inshoring of activities into Eastern Denmark from firms outside Denmark than were eliminated due to offshoring from firms in the Danish region. Overall, highly skilled workers reap the benefits of offshoring and inshoring, whereas the positions of low‐skilled workers are challenged.Originality/value – In contrast to most academic research on offshoring, which predominantly focus on outward offshoring flows, the study analyzes both outward and inward offshoring (inshoring) and gives a more holistic and balanced v...

Distance Isn't Quite Dead: Recent Trade Patterns and Modes of Supply in Computer and Information Services in the United States and NAFTA Partners

This paper evaluates the statistical strengths and weaknesses of available data on US computer and information services trade and estimates the scope of delivery through GATS modes 1, 3, and 4. Trade values are estimated using a new methodology that adheres, to the greatest extent possible, to the definitions of modes of supply in the 2002 Manual on Statistics of International Trade in Services. This paper finds that US trade (particularly exports) in computer and information services are overwhelmingly and increasingly delivered through mode 3. The United States is found to have experienced declining overall revealed comparative advantage (RCA) in traditional mode 1 cross-border computer and information services trade from 1986 to 2006, while having a stable, positive RCA in mode-3 trade. A new methodology for tentatively estimating US imports of computer and information services in GATS mode 4 suggests that the IT services sector dominates US mode-4 imports, and that these are several times larger than US traditional mode-1, cross-border imports of computer and information services.