Does Outsourcing to Central and Eastern Europe Really Threaten Manual Workers Jobs in Germany?
Author InfoIngo Geishecker Abstract Starting from the observation of significant within-industry skill-upgrading, this paper analyses how international outsourcing has affected the relative demand for manual workers in German manufacturing during the 1990s. We combine trade and input-output data to disentangle international outsourcing and trade in final goods and differentiate between the effects of narrowly and broadly defined outsourcing towards Central and Eastern Europe (CEEC), the European Union (EU15) and the rest of the world. Accounting for the endogeneity of international outsourcing by applying instrumental variable techniques, the empirical analysis showed that international outsourcing is indeed an important explanatory factor for the observed decline in relative demand for manual workers in German manufacturing. Particularly, outsourcing towards CEEC plays a major role, irrespective of whether a narrow or wide measure of outsourcing is applied. Using a narrow outsourcing
