Cross-border sourcing and outward processing in EU manufacturing
نویسندگان
چکیده
With the help of a standard 2 × 2 trade model, we develop several hypotheses on the effects of cross-border sourcing on skill intensity in production. The focus is on cross-border sourcing of low-skill-intensive components of exports and import-competing products. We test the aforementioned hypotheses with panel data for manufacturing in the European Union (EU). We find that outward processing is more prevalent in import-competing industries, which are also the EU's relatively intensive users of low-skilled labor. Outward processing in export industries is found to reduce the skill-to-low-skill ratio in EU industries, while outward processing in import-competing industries has more ambiguous effects. Cross border outsourcing: A general equilibrium perspective and evidence for outward processing in EU manufacturing Hartmut Egger and Peter Egger
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