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Sectoral Adjustment of Employment to Shifts in Outsourcing and Trade: Evidence from a Dynamic Fixed Effects Multinomial Logit Model

Peter Egger, Michael Pfaffermayr and Andrea Weber
Journal of Applied Econometrics
Vol. 22, No. 3 (Apr. - May, 2007), pp. 559-580
Published by: Wiley
Stable URL: http://www.jstor.org/stable/25146531
Page Count: 22
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Sectoral Adjustment of Employment to Shifts in Outsourcing and Trade: Evidence from a Dynamic Fixed Effects Multinomial Logit Model
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Abstract

This paper analyzes the effects of trade and outsourcing on the transition probabilities of employment between sectors, using a dynamic multinomial logit framework with fixed effects. The data cover a sample of individual Austrian male workers over the period 1988-2001. Our results strongly support the view that international economic forces are important determinants of labor market turnover. In particular, an increase in the outsourcing intensity negatively affects the probability of staying in or changing into the manufacturing sector, even more so for industries with a comparative disadvantage.

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