Download - Outsourcing, Occupational Restructuring, and Employee Well-being Is There a Silver Lining?
277
Outsourcing,OccupationalRestructuring,and Employee
Well-beingIs There a Silver
Lining?
Petri BöckermanMika Maliranta
PALKANSAAJIEN TUTKIMUSLAITOS • TYÖPAPEREITA
LABOUR INSTITUTE FOR ECONOMIC RESEARCH • DISCUSSION PAPERS
Helsinki 2012
277Outsourcing, Occupational Restructuring, and Employee Well-beingIs There a Silver Lining?
Petri Böckerman*Mika Maliranta**
This study was funded by the Finnish Work Environment Fund. This paper is also part of the project (No. 134057) financed by the Academy of Finland. Data construction and decomposition computations were
conducted at Statistics Finland, following the terms and conditions of confidentiality. To obtain access to the data, please contact the Research Laboratory of the Business Structures Unit, Statistics Finland, FI-00022,
Finland. We are grateful to Antti Kauhanen for very useful comments. The usual disclaimer applies.
* Labour Institute for Economic Research, [email protected]** ETLA – The Research Institute of the Finnish Economy, [email protected]
An identical version has been published in the Research Institute of the Finnish Economy discussion paper series (#1271).
TYÖPAPEREITA 277DISCUSSION PAPERS 277
Palkansaajien tutkimuslaitosPitkänsillanranta 3 A00530 HelsinkiPuh. 09−2535 7330Faksi 09−2535 7332www.labour.fi
ISBN 978–952–209–103–1 (pdf)ISSN 1795–1801 (pdf)
Tiivistelmä
Tutkimuksessa tarkastellaan toimintojen ulkoistamisen ja tehtävärakenteiden muutosten vaiku-
tuksia työntekijöiden itsensä kokemiin työoloihin. Työoloja mitattiin useilla eri mittareilla. Tulok-
set perustuvat poikkeuksellisen rikkaaseen yhdistettyyn aineistoon. Tarkastelu osoittaa, että ul-
koistaminen ulkomaille lisää työtehtävien häviämistä yrityksissä. Tämän ulkomaille ulkoistamisen
suoran vaikutuksen lisäksi eriteltiin myös ulkoistamisen epäsuoria vaikutuksia niihin työntekijöi-
hin, jotka onnistuvat säilyttämään työpaikkansa sellaisessa yrityksessä, joka on ulkoistanut toi-
mintojaan. Ulkoistamisen epäsuorat vaikutukset ovat tulosten valossa suoria vaikutuksia huomat-
tavasti heikompia. Tämän lisäksi epäsuorat vaikutukset työntekijöiden kokemaan hyvinvointiin
eivät ole yksioikoisen negatiivisia. Ulkoistaminen toisiin teollisuusmaihin esim. parantaa selvästi
suomalaisten työntekijöiden mahdollisuuksia edetä urallaan.
1Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
Contents
Abstract 2
1 Introduction 3
2 Conceptualframework 4
3 Data 8
4 Empiricalspecifications 11
5 Results 12
6 Conclusions 20
Appendix 22
References 26
ETLA Keskusteluaiheita – Discussion Papers No 12712
Abstract
This paper explores the effects of outsourcing on employee well-being through the use of the Finnish linked employer-employee data. The direct negative effect of outsourcing is attributable to greater job de-struction and worker outflow. In terms of perceived well-being, the winners in international outsourcing are those who are capable of performing interactive tasks (i.e., managers, professionals and experts), es-pecially when offshoring involves closer connections to other developed countries.
Key words: globalization, outsourcing, offshoring, working conditions, job satisfaction, subjective well-being
JEL: J28, F23
3Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
1 IntroductionOutsourcing, especially international outsourcing (i.e., offshoring), has become the prima-ry method that firms use to change their production structure across developed countries.Blinder(2006)claimsthatoffshoringconstitutesthenextindustrialrevolution.Maloneetal.(2011)arguethattheworkindevelopedcountrieswillbe‘atomized’intoever-smallerpieces.Offshoringhasalreadyledtothesubstantialverticalfragmentationofproduction.Lindenetal.(2007)describethisprocessinthecaseoftheproductionofApple’siPod,andAli-Yrkköetal.(2011)discussitinthecontextofthevaluechainofaNokiasmartphone.Offshoringislike-ly to entail occupational restructuring within firms. Consequently, offshoring increases thepaceofjobdestructionandworkeroutflow,atleastforthosetypesoftasksthatcanbeeasilyandprofitablyoutsourced.Outsourcing, ingeneral,andoffshoring, inparticular,canthere-forebeexpectedtohavenegativeeffectsonperceivedemployeewell-being,especiallyamongemployeeswhoperform“offshorable”tasks.However,evidenceoftheeffectsofoutsourcingonwell-beingamongemployeeswhoarecapableofkeepingtheirjobs(i.e.,stayers)issparse,despitetheimportanceofongoingchanges.11
Thispapercontributestotheliteratureinmultipleways.First,weuseacomprehensivesetoffirm-levelmeasuresofoffshoring,whereasmuchoftheearlierliteraturehasdependedonin-dustry-levelproxiesforoffshoring.Macrodatamaysufferconsiderablyfromaggregationbias,whichhinderstheidentificationoftheeffects(Geishecker2008).Second,usingthefirm-leveldata,wedistinguishbetweendifferentformsofoutsourcingandexaminetheireffectsindif-ferentdimensions.Wealsoanalyzetheeffectsofinsourcing(i.e.,theoppositeofoutsourcing).Third,throughtheuseofthelinkedemployer-employeedata(includinginformationonoccu-pationsandvariousindicators),wegaugedifferentaspectsofoccupationalrestructuringwith-infirms,includingthedestructionoftasks,characteristics(i.e.,theinteractiveornon-routinenature)oftasks,andassociatedworkeroutflowsbetweentaskswithinfirms(intra-firmmobil-ity)andbetweenfirms(inter-firmmobility).Inconductingthisanalysis,weidentifythedis-tinctmechanismstriggeredbyoutsourcingthatarerelevantforemployeewell-being.Fourth,using the linkedemployer-employeedata,wemerge the firm-levelmeasuresofoutsourcingandintra-firmoccupationalrestructuringwithahostofemployee-levelindicatorsofwell-be-ing.Ingeneral,theliteraturehasfocusedononlyafewspecificaspectsofwell-being,suchasperceiveduncertainty.However,differentaspectsofwell-beingarelikelytoproducedifferenteffects.Thesubsequentanalysisofmultipleoutcomesprovidesacomprehensivepictureofthepotentialeffects.Fifth,thedatacovertheservicesector.Earlierresearchhasfocusedonman-ufacturing,buttheshareofmanufacturingjobshasdeclinedconsiderablyindevelopedcoun-tries,andthemanufacturingsectormaynotbearepresentativepartoftheeconomy.There-fore,thisextensionoftheresearchallowsustodeterminewhethertheearlierfindingsarespe-cifictomanufacturing.
We analyze the effects of outsourcing on employee well-being in the Finnish context. ThepressuresofglobalizationareparticularlypronouncedinFinlandbecauseitisasmall,openeconomywithahighlevelofwagesandbenefits.Inrecentyears,considerablechangeshaveoccurred inFinland’s tradepatterns.Forexample, the shareofnon-OECDcountries in thetotalFinnishmanufacturingtradeincreasedbyroughlytenpercentagepointsduring1999–
1 See Crinò (2009) and Eriksson (2010) for surveys of the labor market effects of multinational firms, internationalization, and off-shoring. For example, Østhus and Mastekaasa (2010) study the impact of downsizing on sickness absence.
4
2004.Withinthemanufacturingsector,theelectronicsindustryhasrapidlyincreaseditsout-sourcinginthepasttenyears.Furthermore,theFinnishlabormarkethasbeeninastateofcontinuousturbulencefordecades(IlmakunnasandMaliranta2011).Onaverage,morethantenpercentofall jobsintheFinnishbusinesssectorareeliminatedannually,andthistrendhasbeenstable inrecentyears.Worker inflowandoutflowrateshavebeenmore thantwo-fold.Despiteincreasingglobalizationandturbulentlabormarkets,however,accordingtotheEurobarometer,2lifesatisfactioninFinlandhasbeenatahighlevelwithastableorincreasingtrend(seeLehtoandSutela2009).Thisisnottosay,ofcourse,thatglobalization,withitsvari-ousformsandassociatedlabormarketeffects,hasbeenirrelevantforwell-being,especiallyforthosewhoaremostvulnerabletoitsimpacts.However,offshoringmayplayanimportantroleinreshapingoccupationalstructuresinamannerthatnotonlyincreasesthelaborproductiv-ityandcompetitivenessoftheeconomybutmayalsoprovidemoresatisfyingjobcharacteris-tics(e.g.,moreinteractiveandlessroutinetasks)foremployeeswhoareabletokeeptheirjobsintheprocessofrestructuring.
Thenegativeeffectsofoffshoringonemployeewell-beinghavegainedconsiderableattentionintheliteratureand,especially,inpublicdebate.However,broaderconsiderationssuggestthatoffshoring is likely tohaveapositiveeffect forat least tworeasons.First,offshoring ispartoftherestructuringprocessthatinvolvesanincreaseintheshareofhighvalue-addedoccu-pations in theeconomy.Wedocumentdirectevidence for thisbecauseoffshoring increasestheshareofknowledgeworkersintheaffectedfirms.Restructuringalsofuelstheeconomicgrowththatisfoundtoincreasehappinessindevelopedcountries(Sacksetal.2010;Steven-sonandWolfers2008).Second,ourresultspointoutthattheoffshoring-triggeredrestructur-ingmechanismincreasestheshareofoccupationsintheaffectedfirmsthatarenotonlywellpaidbutarealsofulfillingbecausetheperceivedwell-beingderivedfromthemishighinsev-eraldimensions.
Thispaperproceedsas follows.We firstdescribe theconceptual frameworkand the linkeddata.Anoverviewoftheempiricalspecificationsisprovidednext.Theestimationresultsarethenpresentedandasummaryconcludes.
2 Conceptual frameworkDimensions of Outsourcing and Its Links to Employee Well-being. Figure1illustratesthecon-ceptualframeworkoftheanalysis.Theultimateaimistounderstandhowoutsourcingatthefirmlevelaffectsthewell-beingofstayingemployees.Wepayparticularattentiontotheroleofoccupationalreorganizationwithinfirmsasaconveyingmechanismbetweenoutsourcingandemployeewell-being.Furthermore,weemphasizethefactthateachofthethreepartsoftheanalysis–outsourcing,occupational restructuringandwell-being–hasdiversedimen-sionsthatwarrantclosescrutiny.Figure1revealshowthecombineddata(described inde-tailinthenextsection)provideanexceptionalopportunitytoexaminethethreecloselyinter-linkedpartsandtheirmultipledimensions.Richdatasetsonoutsourcingandemployeewell-beingandcarefulmeasurementofthedifferentaspectsofoccupationalrestructuring,usingacomprehensivesetofindicators,enableustodisentanglethemechanismsofoutsourcingandperceivedwell-being.Thisallowsustoexaminewhetherthenegativeeffectsofoutsourcing
2 See http://ec.europa.eu/public_opinion/index_en.htm.
5Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
(foremployeeswhoaremaderedundant)mightbeaccompaniedbypositive,counterbalanc-ingimpacts.
Thenegativeeffectsofoutsourcingonemployeewell-beingare evident.Bydefinition,out-sourcingmeansthatcertaintasksareeliminated(i.e.,movedtootherlocalfirmsorabroad);thus,thedemandforthistypeoflaborinthefirmdecreases.Arguably,asubstantialpropor-tionofthenegativeimpactonwell-beingoriginatesfromtheexpectedlossesoffirm-specif-ichumancapital,quasi-rents(aworkerexpectstoearnlessinthefuture)andcostsincurredbythesearchforanewjob.Itshouldalsobenotedthattheworkerswhomanagetokeeptheirjobs might experience a decrease in perceived well-being. First, the decision to outsourcemightindicatefurtheractionsofasimilarsort;thus,therecentoutsourcingmayincreaseun-certaintyabout thefuture.Second,areductioninpersonnelmayentaildecreasedprospectsforpromotion,aweakenedbargainingpositionandvoiceintheorganization,andanincreasedsenseofdiscrimination becauseonlysomeemployeesaresubjecttooutsourcing.Third,out-sourcingisassociatedwithdownsizinginsometasks,withtheresultthatwork intensitymightbehigher.Allofthesecircumstancessuggestthattheexpectedeffectonsatisfactionlevel isnegative.
36
FIGURE 1. DIMENSIONS AND LINKS BETWEEN OUTSOURCING AND
EMPLOYEE WELL-BEING.
DIMENSIONS1.Job satisfaction2.Uncertainty3.Harm4.Hazard5.No promotion6.No voice7.Discrimination8.Work intensity
TYPE1.Domestic outsourcing2.Offshoring3.Insourcing
DESTINATION1.Developed countries2.Developing countries
TYPE1.Task creation and destruction2.Task hiring and separation3.Internal hiring and separation4.Excess task reallocation5.Worker churning6.Change in the share of interactive, non-routine and knowledge tasks
OUTSOURCING WELL-BEINGOCCUPATIONALRESTRUCTURING
Firm-level Individual-level
International Sourcing Survey
(ISS)
Quality of Work Life Survey (QWLS)
The Finnish Longitudinal Employer-
Employee Data (FLEED)
Anal
ysis
Data
DIMENSIONS1.Job satisfaction2.Uncertainty3.Harm4.Hazard5.No promotion6.No voice7.Discrimination8.Work intensity
TYPE1.Domestic outsourcing2.Offshoring3.Insourcing
DESTINATION1.Developed countries2.Developing countries
TYPE1.Task creation and destruction2.Task hiring and separation3.Internal hiring and separation4.Excess task reallocation5.Worker churning6.Change in the share of interactive, non-routine and knowledge tasks
OUTSOURCING WELL-BEINGOCCUPATIONALRESTRUCTURING
Firm-level Individual-level
International Sourcing Survey
(ISS)
Quality of Work Life Survey (QWLS)
The Finnish Longitudinal Employer-
Employee Data (FLEED)
Anal
ysis
Data
Figure 1 Dimensions and links between outsourcing and employee well-being
6
Thelinkbetweenoutsourcingandwell-beingismoreambiguouswhenthevariabilityinout-sourcing,theheterogeneityofemployees,andthedifferentaspectsofwell-beingarefullycon-sidered.Inotherwords,outsourcingislikelytohavediverseeffectsondifferentdimensionsofwell-being.Theeffectsmayalsovarysignificantlybetweendifferenttypesofsurvivingem-ployees because the adjustment does not treat all employees equally. Some employees maygainintheprocess,whileothersmaylose.Thispotentiallyobscuresthegeneralrelationshipbetweenoutsourcingandperceivedwell-being.Forinstance,knowledgeworkersmaybenefitdisproportionately fromoffshoringbecause itcreatesopportunities for themtoutilize theirskills.
Theeffectsmayalsodifferbythegeographicaldestinationofoutsourcing.Survivingemploy-eesmayperceiveoffshoringtodevelopingcountriesasasignofweaknessinthefirm’sposi-tioninthemarket.Moreover,thequalityofjobsisdrasticallylowerindevelopingcountriesthan in Finland, which constitutes a potential threat to domestic labor standards. Indeed,thereissomeprevioussupportfortheheterogeneityoftheeffectsofoffshoring.Geisheckeretal.(2011)reportedthatoutsourcingtohigh-wagecountriessignificantlyimprovestheper-ceivedlevelofjobsecurityamongGermanemployees,butoffshoringtodevelopingcountrieshastheoppositeeffect.Furthermore,theunderlyingmotivationforoffshoringmayhaveim-plicationsforitssubsequentwell-beingeffects.Inparticular,itisreasonabletoarguethatoff-shoringshouldhavemorenegativeeffectsonemployeewell-beingiftheactivityismotivatedbythereductionoflaborcostsratherthanbyopeningnewmarketsforproductsandservic-esthatwouldbenefitboththefirmanditsworkforceinthelongrun.3Thebottomlineofthediscussionaboutthepotentialheterogeneityoftheeffectsisthatthereisanapparentneedtoestimatespecificationsthatallowforflexibleeffects.
Measurement of Occupational Restructuring. Afirmisacollectionofjobswithdifferenttasks.Occupationalrestructuringistheresultoftaskcreationanddestructioninthefirm.Wegaugevariousaspectsofintra-firmoccupationalrestructuringbyapplyingthestandardmeasuresofjobandworkerflowsattheleveloffirmsinsteadofatthelevelofasectororanindustry,asistypicallydoneintheliterature(Burgessetal.2000;DavisandHaltiwanger1999).Tomeas-uretaskcreationanddestruction,weidentifythenumberofworkersindifferenttasksinthefirmusingtheISCO-88classificationofoccupationsatthe1-digitlevel.4Thegroupsareasfollows:
1. Managers2. Professionals3. Techniciansandassociateprofessionals4. Clerks5. Serviceandcareworkersandshopandmarketsalesworkers6. Craftandrelatedtradeworkers7. Plantandmachineoperatorsandassemblers8. Elementaryoccupations.
3 Ali-Yrkkö (2007) has reported that cost savings have been an important motivation behind outsourcing for the Finnish companies.4 Skilled agricultural and fishery workers are excluded from the analysis because we focus solely on the non-farm business sector. Our general approach resembles the approaches of Bauer and Bender (2004) and Askenazy and Moreno Galbis (2007), who also study intra-firm organizational changes.
7Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
Taskcreation(TC)infirmi isthesumofpositiveemploymentchangesinthetasks(j=1,…,8)
betweenyeartandt-1, , ,where denotesthedifferenceoperatorandthe
superscript “+” indicates that Lijt > Lij, t–1. Task destruction (TD) is defined analogously:
,wherethesuperscript“-”indicatesthatLijt < Lij, t–1.Thenetemployment
changeinfirmiis .Therefore,afirmmayexperiencesimul-
taneoustaskcreationanddestruction.Followingtheliteratureonjobflows,asuitableindica-torofsuchactionsisexcesstaskreallocation(ETR):ETRit = TCit + TDit – NETit.
Themeasuresofworkerflowsprovideausefulextensiontotheanalysisofoccupationalre-structuring.ItholdsthatNETit = TCit – TDit = Hit – Sit,whereH(hired)denotesthenumberof employees who were hired for the current task in year t, and S (separated) indicates thenumberofemployeeswholefttheirtaskinyeart.Thehiredemployeesconsistoftwogroups:internally hired (IH) employees, who worked for the same firm (but in a different task) inyeart-1,andexternallyhired(EH)employees,whodidnotworkforthesamefirminyeart-1.Analogously,theseparationscanbedividedintointernallyseparated(IS)andexternallysepa-rated(ES).Thus,itholdsthatNETit = TCit – TDit = Hit – Sit = IHit + EHit – ISit – ESit.Bydefini-tion,IHit = ISit.Tomeasuretheamountof“excessive”workerturnoverinthefirm,wecanusethechurningflowmeasure:CFit = Hit + Sit – (TCit + TDit).
Following the convention in the literature on job and worker flows, all flow measures areconverted into ratesbydividing themby theaverageemploymentof the firm inyear t and
t-1(AL); .5 In the empirical analysis,
wedonotuseannualchanges(i.e.,changesbetweent-1andt);instead,weuseasix-yearwin-dow(i.e.,changesbetween2000and2006).Thischoiceisdictatedbythestructureandcon-tentofourdata.Furthermore,longerdifferencesareusefulforcapturingtime-consumingandgradualmechanisms,suchasthoseexaminedinthisstudy,especiallywhenthedatacontainsomeshort-run“noise”(GrilichesandHausman1986).
Inadditiontothemeasuresoftaskflowrates,wealsoapplyindicatorsthatgaugetheshareofinteractiveandnon-routinetasksinthefirms.Bymeasuringthechangesintheseindicatorsbetween2000and2006,wecanexploreinterestingcharacteristicsofoccupationalrestructur-ingatamoredetailedlevel.Thisopportunityexistsbecausetheindicatorsofthesharesofin-teractiveandnon-routinetasksaredefinedbyusingtheISCO-88classificationoftheoccupa-tionsatthe2-digitlevel,followingBeckeretal.(2009).6Non-routinetasksinvolvenon-repet-itiveworkmethodsandcreativeproblemsolving;theycannotbeprogrammedassimplerules.Interactivetasksrequirepersonalinteractionwithco-workersorthirdparties.Thiscategori-zationofdifferentoccupationsintermsoftheircontentisrelatedtothemeasuresofoutsourc-ingbecauseroutineandnon-interactivetasksaremosteasilyoffshored(Baldwin2006;Beck-eretal.2009).Amorestraightforwardmeasureofoccupationalrestructuringconsistsofthechangeintheshareofknowledgeworkersbetweentwopointsintime.Intheempiricalanal-ysis, “knowledge workers” comprise a broad category, including the first four occupational
5 A useful property of using the average employment as a denominator is that the growth rates are symmetric around the zero (Davis and Haltiwanger 1999).6 Nilsson Hakkala et al. (2009) use the same classification of occupations and the same information on the skill content of tasks.
8
1
jit ijtj
TC L= +=
= ∆∑ ∆
8
1
jit ijtj
TD L= −=
= ∆∑8 8
, 11 1
j jit ijt ij tj j
NET L L= =
−= == −∑ ∑
( ) ( )8 8, 1 , 11 1
2 2j jit ijt ij t it i tj j
AL L L L L= =
− −= == + = +∑ ∑
8
groups(i.e.,managers,professionals,techniciansandassociateprofessionals,andclerks)be-cause, inmostworkplaces, techniciansandassociateprofessionalsaswell as clerkswork incloseco-operationwithprofessionals.7
Therefore, in theempirical specifications,weuse the followingelevenmeasuresofoccupa-tionalrestructuring:1)taskdestructionrate,2)taskseparationrate,3)externaltasksepara-tionrate,4)internaltaskseparationrate,whichisequaltotheinternaltaskhiringrate,5)ex-cesstaskreallocationrate,6)churningflowrate,7)thechangeintheshareofinteractivetasks,8)thechangeintheshareofnon-routinetasks,9)taskcreationrate,10)taskhiringrate,and11)thechangeintheshareofknowledgeworkers.
3 DataTheanalysis isbasedonrich, linkeddatathatcombinethreedifferentdatasources(seethebottompanelsofFigure1).Eachsourcehassubstantialmeritsforthestudyoftheeffectsofoutsourcing.
International Sourcing Survey. To measure firms’ outsourcing activities, we use a firm-levelsurvey,theInternationalSourcingSurvey(ISS)ofStatisticsFinland(SF),conductedin2009(seeStatisticsDenmarketal.2008).Thequestionsonthissurveyrefertodomesticoutsourc-ingandoffshoringduringtheperiod2001–2006andcoverthenon-financialbusinesssector(NACE,sectionsCtoIandK).ThefocusoftheISSwasonlargeenterprisesbecausemulti-nationalenterprisesareconsideredkeyplayers,particularlyinoffshoring.Arandomsampleofsmallerfirms(50–99employees)wasalsoanalyzed,butthecoverageofthesurveyonlarg-erfirms(atleast100employees)ismuchmorecomplete.Theresponserateofthesurveywas80%.Thefinaldatacover1,400firms.Approximately300ofthesefirmshaveaworkforceof50–99employees,andotherfirmsinthesurveyhaveat least100employees.Becauseoftheframeworkofthequestionnaire,thedatacoverasubstantialproportionofthetotalemploy-mentintheFinnishbusinesssector.Forexample,inthemanufacturingsector,theISScover-ageis60%.Intheservicesector,thecoverageis46%ofthefirmsthatemployatleast5per-sons(Maliranta2011).
OffshoringisdefinedintheISSasthetotalorpartialmovementofbusinessfunctions(coreorsupportbusinessfunctions)currentlyperformedin-houseordomesticallyoutsourcedbytheresidententerprisetoeithernon-affiliated(externalsuppliers)oraffiliatedenterpriseslocatedabroad(StatisticsDenmarketal.2008,p.13).Alloutsourcingindicatorsusedinthefollowinganalysismeasuretheoutsourcingofafirm’scorebusinessfunctionsbecausetheoutsourcingofthesefunctionsislikelytohaveaneffectonsurvivingemployees’well-being.8TheISSalsoincludesinformationaboutdomesticoutsourcing,thegeographicaldestinationsofoffshoring,thefirms’motivationsforoffshoringandinformationoninsourcing(i.e.,theoppositeofoff-shoring)ofcorebusinessfunctions.
7 Hopp et al. (2009) consider specific aspects of white-collar tasks at the individual, team and organization levels.8 The definition of core business function is the production of final goods or services intended for the market or for third parties that are conducted by the enterprise and yield income. In most cases, the core business function equals the primary activity of the enterprise. It may also include other (secondary) activities if the enterprise considers these to be part of its core functions (Statistics Denmark et al. 2008, p. 13).
9Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
Finnish Linked Employer-Employee Data. ThesecondconfigurationofdatathatweuseintheanalysisistheFinnishLongitudinalEmployer-EmployeeData(FLEED).Thesedataarecon-structedfromanumberofdifferentregistersonindividualsandfirmsthataremaintainedbySF.TheycontaininformationfromEmploymentStatistics,whichrecordseachemployee’sem-ployerduringthelastweekofeachyear.FLEEDareprimarilyusedtomeasureoccupationalrestructuringinfirmsusingthemeasuresoftaskflowsproposedbyMaliranta(2009,2011).The measures of occupational restructuring are based on the ISCO-88 classification at the1-digitlevel(Maliranta2009,2011),asdescribedearlier.9Oneimportantadvantageofthesemeasuresisthat,bydesign,theyareabletotakeintoaccounttheintensityofrestructuring.Incontrast,themeasuresofoutsourcingfromtheISSarebinaryindicators.
Quality of Work Life Survey. Thethirdsetofdatathatweuseisthelatestedition(2008)oftheQualityofWorkLifeSurvey(QWLS)ofSFtomeasureemployeewell-being(LehtoandSute-la2009).TheQWLSprovidesarepresentativesampleofFinnishwageandsalaryearners(theself-employedareexcluded).Theinitialsampleforthissurveyisderivedfromamonthlylaborforcesurvey(LFS)bySF,forwhicharandomsampleoftheworking-agepopulationisselectedfortelephoneinterviews.TherepresentativesampleofemployeesintheQWLSprovidesasig-nificantadvantageoverpreviousstudies,whichhavefocusedonafewmanufacturingindus-triesorsinglefirms.Theestimatesforcertainsectorsandfirmscouldbesubjecttoselectionbiasiftheunobservedfactorsthatdeterminewhetheremployeeschoosetoworkinthesectororfirmalsoinfluencetheirperceivedwell-being.
The2008QWLSwasbasedontheLFSrespondentsinMarchandAprilwhowere15–64yearsoldandhadanormalweeklyworkingtimeofatleasttenhours.6,499individualswereselect-edfortheQWLSsampleandinvitedtoparticipateinapersonalface-to-faceinterview.Ofthissample,4,392personsparticipated(approximately68%)(LehtoandSutela2009),whichwasaveryhighresponserate(68%)foracomplexandburdensomeface-to-facesurvey.Theaver-agelengthoftheinterviewswas66minutes.Face-to-faceinterviewsensurereliableanswerstoalmostallquestions.Duetomissing informationonsomevariables forsomeemployees,thefinalsamplesizeoftheQWLSincludedapproximately4,300observations(~30%ofthesecover thepublic sector,which isnot included inouranalysis).TheQWLS is supplementedwithinformationfromtheLFSandseveralregistersmaintainedbySF.Forexample,informa-tionabouttheeducationallevelofemployeesoriginatesfromtheRegisterofCompletedEdu-cationandDegrees.
Weusedseveralvariablestocaptureemployeewell-being,basedontheQWLS.Someofthesemeasuresweregeneralmeasuresofwell-beingatwork,suchas jobsatisfaction,whileothervariablescapturedmorespecificaspectsofemployeewell-being,suchasperceivedworkin-tensity.Jobsatisfactionwasmeasuredonafour-pointLikertscale.Negativejobaspectsweremeasured according to Böckerman and Ilmakunnas (2008). For perceived uncertainty, therespondents stated whether certain aspects were insecurity factors, including the threat oftemporarydismissalandthethreatofunemployment.Perceivedharmswereratedonafive-pointscale,withthehighestcategorycorrespondingtoanemployee’sperceptionthatacertainworkingconditionwas‘verymuch’anadversefactorintheworkplace.Harmsincludedheat,cold,anddust,amongothers.Forperceivedhazards,themostseriousofthreepossibilitieswas
9 Maliranta (2011) provides detailed descriptive evidence on the roles of occupational restructuring in the context of the Finnish business sector.
10
therespondent’sdesignationofaparticularworkplacefeatureas ‘adistincthazard’.Hazardsincludedaccidentrisk,straininjuryrisk,andworkexhaustionrisk,amongothers.Respons-estothequestionsaboutadverseworkingconditionswereaggregatedbycreatingadummyvariableequaltooneiftherewasatleastoneclearlyadversefactor(Harm),adummyvaria-bleequaltooneiftherewasatleastonedistincthazard(Hazard),andadummyvariableforatleastoneinsecurityfactor(Uncertainty).1010Theseformulationswerenotparticularlysensi-tivetopotentialmeasurementerrorintheself-reportedmeasuresofworkingconditions.Fur-thermore,weusedindicatorsforpoorpromotionprospects,lackingavoiceintheworkplace,andexperiencingatleastonetypeofdiscrimination.Finally,wecapturedperceivedworkin-tensitybyusingtherespondent’sagreementwiththestatement,‘Workpressureincreasessick-nessabsence’.
Matching. Matchingthesethreedatasourcesispossiblebecauseallofthedatasetsthatweusecontainthesameuniqueidentifiersforfirmsandpersons,maintainedbySF.Thisinformationalsoensuresnear-perfecttraceabilityofemployersandemployeesovertime.TheQWLSandFLEEDarematchedbyusingtheuniqueIDcodesforpersons.UsingFLEED,wecanfollowtheemployeeswhoparticipatedinthe2008QWLSovertheperiod1990–2007.Ineachyear,wecanlinkinformationonthefirmandtheestablishmenttoeachperson.ThecombinationoftheQWLSandFLEEDcanthenbematchedtotheISSbyusingtheuniquefirmcodes.ThevariablesthatareusedintheempiricalspecificationsaredescribedindetailintheAppendix(TableA1).
TheQWLSisacross-sectionaldatasetthatincludesonlylimitedself-reportedinformationonpastlabormarketexperience.However,becauseFLEEDcanbeusedtoincorporateinforma-tiononemployees’workhistoryovertheperiod1990–2007,weareablemeasurevariouslabormarketoutcomesinthepast.Thisisparticularlyimportantinourcontextbecauseweareuna-bletoestimatespecificationswithindividualfixedeffects.Byusingthevariablesthatdescribepastlabormarketoutcomes,weareabletotakeintoaccountotherwiseunobservabledetermi-nantsofsubjectivewell-being(seeLechnerandWunsch2011,foranapplicationofthisideainanothercontext).Thespecificationsthatweestimateforemployeewell-beingassumethatun-observedheterogeneityisnotcorrelatedwiththeexplanatoryvariableofinteresttoestablishacausaleffect.Intheempiricalspecifications,weusepastaverageearningsandthenumberofemploymentandunemploymentmonthstodescribeemployees’relevantworkhistory.
BecausetheQWLSdataarefrom2008,inthefinalestimationsample,weuseonlythoseem-ployeeswhowereemployedinthesamefirmduringtheperiod2006–2008.Thematcheddatacontain770observations.ThisnumberreflectsthefactthattheISSdataaremuchmorelike-lytopertaintolargefirms.Thefinalestimationsamplecontainsobservationson367firms;therefore,wehave,onaverage,twoobservationsforeachfirm.Wealsoestimateseparatespec-ifications forknowledgeworkers,witha sample sizeof421.The specifications thatuse themeasuresofoccupational restructuringarebasedona largerdata setof1,174observationsbecausewedonothavetorelyonafirm-levelsurvey(ISS).Instead,wecanusecomprehen-siveregisterdatafromFLEEDtoconstructthemeasuresofturbulence.Thenumberofdiffer-entfirmsinthissampleis796.
10 The most common elements of uncertainty are ‘unforeseen changes’, ‘work load increases beyond tolerance’, and ‘transfer to other duties’. These components of uncertainty typically affect the same employees. The perception of the threat of becoming incapable of work is also quite common (25% of all employees). This threat is much more frequent among older employees, as expected. Note that we control for the age effects in all specifications for perceived well-being.
11Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
4 Empirical specificationsThe initialstep intheanalysis is toestablishthe impactofoutsourcingonoccupationalre-structuringbyusingfirm-levelregressions(thefirstandsecondpanelsofFigure1).Thesees-timatesrevealthedirecteffectsofoutsourcingonemployees.Thespecificationstakethefol-lowingform:
(1)
whereRESTRUCTURINGjkrepresentsthemeasurekofoccupationalrestructuringforfirmj. Weuseasthedependentvariableselevendifferentmeasuresofoccupationalrestructuring,asdescribedearlier.Xj represents thevectorofcontrolvariables,which includethesizeof thefirm(thelogarithmofemployment)andtheindustryeffects(withasetofindicatorsfor22in-dustries).Thevariableofinterestisthemeasureofoutsourcing.Inallspecifications,thebase-linecategoryisthatthefirmhasneitheroutsourceddomesticallynoroffshoreditscorebusi-nessfunctionsduringtheperiod2001–2006.Thesespecificationsareestimatedbyusingem-ployment-weighedOLS.Withthisapproach,thefirm-levelregressionsofequation(1)canbeinterpretedasdatawithobservedmeansonindividualemployees.Descriptivestatistics(TableA2,Columns1–3)revealthatthedatacontaininformationonfirmsthatcollectivelyemploy~350,000employees,whichisapproximatelyone-fourthofallFinnishprivatesectoremploy-ees.Approximately100,000employeeshaveworkedinfirmsthathavebeensubjecttosometypeofoutsourcing.
Toexaminetheconnectionbetweenoutsourcingandperceivedwell-beingamongsurvivingemployees(thefirstandthirdpanelsofFigure1),weestimatespecificationswiththefollow-ingstructure:
(2)
whereYijkisthemeasurekofemployeewell-beingforindividuali employedinfirmj. Weuseasthedependentvariableseightdifferentmeasuresofemployeewell-being.Xij representsthecontrolvariables,whichincorporatethestandardindividual-levelcovariates,suchasemploy-ees’ageandeducationlevel,basedontheliteratureonsubjectivewell-being(Clark1996).Thestandarderrors inall specificationsofequation(2)areclusteredat the firmlevel.Columns4–5ofTableA2providedescriptivestatisticsfortheemployee-leveldata.
Notethatoutsourcingactivitiescanbetreatedasexogenoustoindividualemployees.Theevi-denceindicatesthatoffshoringfirmsaremoreproductivethannon-offshoringfirms(Wagner2011).Forvariousreasons,weexpectapositiverelationshipbetweenproductivityandwag-esatthefirmlevel,andtheempiricalevidencesupportsthisexpectation(Abowdetal.1999;Baggeretal.2010).Equation(2)canbeinterpretedasatestoftheexistenceofcompensatingwagedifferentialsbecauseoutsourcingcanbeseenasapotentialdisamenityfromtheemploy-ees’pointofview.Itcanbeshownthatthewageanditsdeterminantsshouldnotbeincludedamongtheright-handsidevariablesoftheequationiftheobjectiveistotestfortheexistenceofcompensatingwagedifferentialsbyusinginformationonsubjectivewell-being(seeBöck-ermanetal.2011).Inprinciple,thepresenceofsomesortofbiasinourestimatescannotbefullyruledoutbecause,forinstance,someemployeesmaybeabletoanticipateupcomingout-
, 1,...,11,jk j j jRESTRUCTURING OUTSOURCING kβ δ ε= + + =X
, 1,...,8,ijk ij j ijY OUTSOURCING kβ η ε= + + =X
12
sourcing.However,givenourcontext,thisbiasislikelytobenegligible,andthedirectionisuncertain.
Finally,weexploretheeffectofoccupationalrestructuringonsurvivingemployees’well-be-ing(thesecondandthirdpanelsofFigure1).Forthispurpose,weusespecificationswiththefollowingstructure:
(3)
whereYijk isthemeasurekofemployeewell-beingforindividuali employedinfirmj. Theex-planatoryvariablesofinterestareeachseparatemeasure(l=1,…,11)ofoccupationalrestruc-turing.ThevectorofcontrolvariablesXij isexactlythesameasinequation(2).ThelasttwocolumnsofTableA2documentdescriptivestatisticsforthedatathatareusedwiththesespec-ifications.
5 ResultsOutsourcing and Occupational Restructuring. Wefirstexaminewhethertheoutsourcingactiv-itiesofFinnishfirmsareassociatedwithoccupationalrestructuringand,ifso,inwhatways.Becauseweareparticularlyinterestedintheroleoffirms’outsourcingfromtheperspectiveof employees, the baseline estimates refer to employment-weighted regressions (Table 1).11Anadditionaladvantageoftheemployment-weightedregressionsisthattheyputgreaterem-phasisonlargerfirms,forwhichthemeasuresofoccupationalrestructuringaremorerelia-ble(IlmakunnasandMaliranta2005).TheresultsinTable1refertocontinuingfirmsbecausemostoftherestructuringoccursamongthem.Withthisrestriction,weavoidtheasymmetriescausedbyentriesandexits.Becauseweincludethefullsetofindustryindicatorsamongthecontrolvariables,theresultspointtowithin-industryeffects.
Theestimatesofequation(1)reportedinTable1revealacoherentpattern.Statistically,off-shoringhasaverysignificantpositiverelationshipwiththeratesoftaskdestructionandtaskseparation (PanelA,Columns1–2).The latter connectionprevailsbecauseof external taskseparation(PanelA,Column3).Incontrast,offshoringisnotconnectedtointernaltasksepa-ration(and,thus,neitherisinternaltaskhiring;seePanelA,Column4).Furthermore,theef-fectofoffshoringonthe“creative”sideofoccupationalrestructuringappearstobenegative,asindicatedbythesignificantnegativecoefficientsforthetaskcreationandtaskhiringrates(PanelA,Columns9–10).Thepointestimatesofoffshoringonthesharesofinteractiveandnon-routinetasks(atthe2-digit leveloftheISCO-88classification)arepositive,buttheef-fectsarenotstatisticallysignificant(PanelA,Columns7–8).Ourbroadermeasureofthecom-positionof theworkforcegivessupport to theargument thatoffshoringcontributessignifi-cantlytotheincreaseinknowledgeworkinfirms(PanelA,Column11).
PanelBofTable1providesamoredetailedbreakdownofoutsourcingaccordingtogeograph-icaldestination.WefindthatoffshoringfortherestofEuropeanddevelopingcountrieshasthemostpronouncedpositiveeffectsontaskdestructionandtaskseparation(PanelB,Col-umns1–2).Thesetypesofoffshoringhaveapositiveimpactontheshareofknowledgework
11 We use the average employment in 2000 and 2006.
, 1,...8 1,...11,ijk ij jl ijY RESTRUCTURING k lβ λ ε= + + = =X
13Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
37
TAB
LE 1
THE
EFFE
CT
OF
OU
TSO
UR
CIN
G O
N O
CC
UPA
TIO
NA
L R
ESTR
UC
TUR
ING
AT
THE
FIR
M L
EVEL
Pane
l A
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(1
1)
Ta
sk
dest
ruct
ion
Task
se
para
tion
Exte
rnal
ta
sk
sepa
ratio
n
Inte
rnal
task
se
para
tion
(i.e.
, in
tern
al ta
sk
hirin
g)
Exce
ss ta
sk
real
loca
tion
Wor
ker
chur
ning
Th
e ch
ange
in
the
shar
e of
in
tera
ctiv
e ta
sks
The
chan
ge
in th
e sh
are
of n
on-
rout
ine
task
s
Task
cr
eatio
n Ta
sk h
iring
Th
e ch
ange
in
the
shar
e of
kn
owle
dge
wor
kers
D
omes
tic o
utso
urci
ng
-0.0
499
-0.0
223
-0.0
567
0.03
44**
0.
0447
0.
0551
-0
.017
5**
-0.0
155
-0.0
129
0.01
47
0.00
171
(0
.043
6)
(0.0
391)
(0
.037
9)
(0.0
156)
(0
.030
7)
(0.0
433)
(0
.007
45)
(0.0
105)
(0
.057
4)
(0.0
501)
(0
.016
9)
Off
shor
ing
0.19
2***
0.
216*
**
0.19
0***
0.
0267
0.
0074
1 0.
0494
0.
0132
0.
0217
-0
.212
**
-0.1
87**
0.
0443
**
(0
.072
9)
(0.0
646)
(0
.065
3)
(0.0
210)
(0
.040
7)
(0.0
493)
(0
.012
3)
(0.0
187)
(0
.088
1)
(0.0
768)
(0
.021
0)
N
1096
10
96
1096
10
96
1096
10
96
1096
10
96
1096
10
96
1096
Pa
nel B
(1
) (2
) (3
) (4
) (5
) (6
) (7
) (8
) (9
) (1
0)
(11)
Task
de
stru
ctio
n Ta
sk
sepa
ratio
n Ex
tern
al
task
se
para
tion
Inte
rnal
task
se
para
tion
(i.e.
, in
tern
al ta
sk
hirin
g)
Exce
ss ta
sk
real
loca
tion
Wor
ker
chur
ning
Th
e ch
ange
in
the
shar
e of
in
tera
ctiv
e ta
sks
The
chan
ge
in th
e sh
are
of n
on-
rout
ine
task
s
Task
cr
eatio
n Ta
sk h
iring
Th
e ch
ange
in
the
shar
e of
kn
owle
dge
wor
kers
D
omes
tic o
utso
urci
ng
-0.0
361
-0.0
0777
-0
.037
5 0.
0297
* 0.
0276
0.
0567
-0
.017
1**
-0.0
147
-0.0
312
-0.0
0283
0.
0066
6
(0.0
395)
(0
.036
0)
(0.0
343)
(0
.016
1)
(0.0
343)
(0
.043
4)
(0.0
0700
) (0
.009
96)
(0.0
581)
(0
.049
6)
(0.0
161)
O
ffsh
orin
g to
the
15 E
U c
ount
ries
-0.0
938
-0.0
588
-0.0
719
0.01
31
0.08
68
0.07
01
0.00
595
0.00
453
0.01
97
0.05
47
-0.0
0408
(0.0
652)
(0
.060
3)
(0.0
634)
(0
.026
5)
(0.0
610)
(0
.055
8)
(0.0
0988
) (0
.016
5)
(0.0
817)
(0
.069
5)
(0.0
254)
O
ffsh
orin
g to
the
rest
of E
urop
e 0.
241*
**
0.20
0**
0.22
4***
-0
.023
5 -0
.070
1***
-0
.081
1 0.
0142
0.
0219
-0
.111
-0
.151
* 0.
0327
(0.0
879)
(0
.077
6)
(0.0
812)
(0
.022
6)
(0.0
265)
(0
.062
4)
(0.0
167)
(0
.025
9)
(0.0
938)
(0
.080
2)
(0.0
298)
O
ffsh
orin
g to
dev
elop
ing
coun
tries
0.
171*
0.
207*
* 0.
139
0.06
82**
* 0.
0919
**
0.07
18
0.00
334
0.00
587
-0.2
06
-0.1
70
0.05
74**
(0.0
976)
(0
.086
1)
(0.0
924)
(0
.024
6)
(0.0
439)
(0
.071
8)
(0.0
202)
(0
.027
5)
(0.1
26)
(0.1
07)
(0.0
230)
O
ffsh
orin
g to
oth
er d
evel
oped
cou
ntrie
s 0.
0235
0.
0504
-0
.067
0 0.
117*
* 0.
187
0.05
38
0.00
388
0.01
66
-0.0
270
-8.1
3e-0
5 -0
.054
7
(0.1
44)
(0.1
31)
(0.1
28)
(0.0
544)
(0
.167
) (0
.114
) (0
.018
1)
(0.0
313)
(0
.230
) (0
.200
) (0
.036
2)
N
1096
10
96
1096
10
96
1096
10
96
1096
10
96
1096
10
96
1096
Not
es: T
he m
easu
res
for o
ccup
atio
nal r
estru
ctur
ing
are
for t
he p
erio
d 20
00-2
006,
and
the
outs
ourc
ing
mea
sure
s ar
e fo
r the
per
iod
2001
-200
6.
The
base
line
cate
gory
in a
ll sp
ecifi
catio
ns is
that
the
firm
has
nei
ther
out
sour
ced
dom
estic
ally
nor
off
shor
ed it
s cor
e bu
sine
ss fu
nctio
ns o
ver t
he
perio
d 20
01-2
006.
The
firm
-leve
l m
odel
s ar
e es
timat
ed w
ith e
mpl
oym
ent
wei
ghte
d O
LS, a
s ex
plai
ned
in t
he t
ext.
The
unre
porte
d co
ntro
ls
Tabl
e 1
The
effe
ct o
f out
sour
cing
on
occu
pati
onal
rest
ruct
urin
g at
the
firm
leve
l
Not
es: T
he m
easu
res
for o
ccup
atio
nal r
estr
uctu
ring
are
for t
he p
erio
d 20
00–2
006,
and
the
outs
ourc
ing
mea
sure
s ar
e fo
r the
per
iod
2001
–200
6. T
he b
asel
ine
cate
gory
in a
ll sp
ecifi
catio
ns
is th
at th
e fir
m h
as n
eith
er o
utso
urce
d do
mes
tical
ly n
or o
ffsho
red
its c
ore
busi
ness
func
tions
ove
r the
per
iod
2001
–200
6. T
he fi
rm-le
vel m
odel
s ar
e es
timat
ed w
ith e
mpl
oym
ent w
eigh
ted
OLS
, as
expl
aine
d in
the
text
. The
unr
epor
ted
cont
rols
incl
ude
the
loga
rithm
of e
mpl
oym
ent i
n th
e fir
m a
nd a
set
of i
ndic
ator
s fo
r 22
indu
strie
s. R
obus
t sta
ndar
d er
rors
in p
aren
thes
es: *
**
p<0.
01, *
* p<
0.05
, * p
<0.1
.
14
(PanelB,Columns11).Thisresultimpliesthattheadverseeffectsare,asexpected,concen-tratedonblue-collartasks.Itisparticularlyinterestingtoobservethatoffshoringtootherde-velopedcountriesdoesnothavesignificanteffectsontaskcreationordestructionoronthechangeinthestructureoftasks.However,itdoeshaveastrongpositiveeffectoninternalmo-bility(measuredbyinternaltaskseparation),whichlikelyreflectstheongoingchangesinor-ganizationalstructure(PanelB,Column4).
Theeffectsofdomesticoutsourcingarenotablydifferentfromoffshoring.Interestingly,thisoutsourcinghasanegativeeffectontheshareof interactive tasks in the firms(PanelsA–B,Column7).Theeffectontheshareofnon-routinetasksisalsonegative,butstatisticallyinsig-nificant.Domesticoutsourcingispositivelyassociatedwithinternalseparation(andthusin-ternalhiring),indicatingthatitpromotesintra-firmoccupationalmobility(PanelsA–B,Col-umn4).
Overall,theevidenceclearlyindicatesthatoutsourcinghasanimportanteffectonoccupation-alrestructuringandthatitcanbeexpectedtohavedirectadverseeffectsonthewell-beingofemployeesduetoitseffectofincreasingtaskdestructionandtaskseparationinfirms.Howev-er,theresultsalsorevealthatpartofoccupationalrestructuringtakesplacethroughinternaltaskseparation(andthusinternaltaskhiring).Thistypeofmobilityisnotnecessarilysolelynegativefromthepointofviewoftheemployeesinvolved.
Outsourcing and the Well-being of Employees. Next, we examine how firms’ outsourcing af-fectsdifferentdimensionsofwell-beingamongsurvivingemployees,basedonequation2(Ta-ble2).12Notethatthedescriptivestatisticsfortheoutsourcingvariablesconfirmthattheem-ployee-leveldataremainrepresentativecomparedtotheemployment-weightedfirm-levelda-ta(TableA2,Columns3and5).Beforeexaminingtheeffectsofoutsourcing,wefirstnotethattheoccupationgrouphasasignificantimpactonemployeewell-being.Table2showsthatper-ceivedwell-being isparticularly lowamongserviceand salesworkersaswell as among thetypical blue-collar occupations. The latter group of occupations also has particularly poor(physical)workingconditions(PanelA,Columns3–6).
An important finding is that offshoring does not have an independent, statistically signifi-cant effect on any measure of employee well-being, conditional on occupational group andindividual-levelcontrolvariables(PanelA).Thereis,however,someevidencethatdomesticoutsourcinghasapositiveimpactonjobsatisfactionthatcanbeattributedtoalowerlevelofharm(PanelA,Columns1and3).Theestimatesforthe(unreported)controlvariablesthatareincludedinallspecificationsofTable2areinaccordancewithpreviousstudiesthathaveusedvariousFinnishdatasetstoestimatewell-beingequations.13
ItisnotablethattheestimatesinPanelAofTable2donotrevealasignificantimpactofout-sourcingonperceiveduncertaintyintheFinnishcontext.Previousevidencehasrelatedoff-shoringandothermeasuresofglobalizationtojob-lossfears(e.g.,ScheveandSlaughter2004;Geisheckeretal.2011;Lurweg2010).ThereisalsosomeevidencefortheseeffectsfromotherNordiccountries.Munch(2011)reportsthatoutsourcingsomewhatincreasestheunemploy-mentriskoflow-skilledworkersintheDanishmanufacturingsector.Thesefindingsarerel-
12 The correlations between the variables that capture working conditions are reported in Table A3.13 The estimation results for the control variables are available upon request.
15Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
Tabl
e 2
The
effe
ct o
f out
sour
cing
on
perc
eive
d w
ell-b
eing
for a
ll em
ploy
ees
Not
es: T
he v
aria
bles
that
cap
ture
em
ploy
ee w
ell-b
eing
are
mea
sure
d in
200
8. T
he o
utso
urci
ng m
easu
res a
re fo
r the
per
iod
2001
–200
6. T
he e
stim
atio
n sa
mpl
e co
nsis
ts o
f em
ploy
ees w
ho w
ere
empl
oyed
in th
e sa
me
firm
ove
r the
per
iod
2006
–200
8. T
he b
asel
ine
cate
gory
in a
ll sp
ecifi
catio
ns is
that
the
firm
has
nei
ther
out
sour
ced
dom
estic
ally
nor
offs
hore
d its
cor
e bu
sine
ss fu
nctio
ns o
ver t
he p
erio
d 20
01–2
006.
All
spec
ifica
tions
in
clud
e th
e co
ntro
l var
iabl
es th
at a
re li
sted
in T
able
A1.
The
mod
els
also
incl
ude
indi
cato
rs fo
r the
sec
tors
of t
he e
cono
my.
The
bas
elin
e fo
r occ
upat
iona
l gro
ups
cons
ists
of m
anag
ers
and
prof
essi
onal
s. M
argi
nal
effe
cts
from
pro
bit m
odel
s ar
e re
port
ed in
Col
umns
2–8
. Sta
ndar
d er
rors
are
adj
uste
d fo
r clu
ster
ing
at th
e le
vel o
f firm
s fo
r whi
ch e
mpl
oyee
s w
ork.
Sta
tistic
al s
igni
fican
ce: *
** p
<0.0
1, *
* p<
0.05
, * p
<0.1
.
39
TAB
LE 2
THE
EFFE
CT
OF
OU
TSO
UR
CIN
G O
N P
ERC
EIV
ED W
ELL-
BEI
NG
FO
R A
LL E
MPL
OY
EES
Pane
l A
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Jo
b sa
tisfa
ctio
n U
ncer
tain
ty
Har
m
Haz
ard
No
prom
otio
n N
o vo
ice
Dis
crim
inat
ion
Wor
k in
tens
ity
D
omes
tic o
utso
urci
ng
0.09
05*
-0.0
0043
0 -0
.072
6*
0.00
521
-0.0
144
-0.0
268
-0.0
0757
0.
0195
(0.0
542)
(0
.045
9)
(0.0
371)
(0
.045
4)
(0.0
512)
(0
.043
3)
(0.0
442)
(0
.033
2)
Off
shor
ing
-0.0
512
-0.0
222
-0.0
278
-0.0
536
0.01
26
0.01
96
-0.0
171
0.01
36
(0
.068
3)
(0.0
534)
(0
.049
6)
(0.0
549)
(0
.061
1)
(0.0
471)
(0
.054
3)
(0.0
393)
Te
chni
cian
s and
ass
ocia
te p
rofe
ssio
nals
-0
.057
1 0.
0089
2 -0
.048
5 0.
0770
0.
0123
0.
211*
**
0.01
75
0.18
9***
(0.0
748)
(0
.049
6)
(0.0
557)
(0
.062
0)
(0.0
584)
(0
.033
3)
(0.0
549)
(0
.055
2)
Cle
rical
supp
ort w
orke
rs
-0.1
60
-0.0
607
0.15
0**
0.05
93
0.04
64
0.27
2***
-0
.013
2 0.
143*
(0.1
05)
(0.0
767)
(0
.071
3)
(0.0
936)
(0
.082
6)
(0.0
247)
(0
.073
6)
(0.0
769)
Se
rvic
e an
d sa
le w
orke
rs
-0.2
89**
-0
.122
0.
157
0.26
6***
0.
145
0.22
7***
-0
.045
9 0.
187*
(0.1
31)
(0.1
08)
(0.1
06)
(0.0
902)
(0
.105
) (0
.034
1)
(0.1
05)
(0.0
964)
C
raft
and
rela
ted
trade
wor
kers
-0
.177
* -0
.015
6 0.
158*
0.
231*
**
0.21
8**
0.25
9***
0.
0566
0.
0700
(0.1
04)
(0.0
699)
(0
.084
9)
(0.0
809)
(0
.084
9)
(0.0
300)
(0
.081
1)
(0.0
768)
Pl
ant a
nd m
achi
nery
ope
rato
rs
-0.0
983
0.01
97
0.28
2***
0.
355*
**
0.19
9***
0.
321*
**
-0.0
523
0.16
1**
(0
.095
6)
(0.0
634)
(0
.077
3)
(0.0
677)
(0
.076
4)
(0.0
263)
(0
.067
6)
(0.0
776)
O
ther
wor
kers
-0
.214
0.
0453
0.
200*
* 0.
335*
**
0.29
7***
0.
224*
**
0.06
70
0.25
3***
(0.1
43)
(0.0
719)
(0
.097
9)
(0.0
873)
(0
.088
2)
(0.0
324)
(0
.084
7)
(0.0
943)
N
770
770
770
770
770
770
770
770
Pa
nel B
(1
) (2
) (3
) (4
) (5
) (6
) (7
) (8
)
Job
satis
fact
ion
Unc
erta
inty
H
arm
H
azar
d N
o pr
omot
ion
No
voic
e D
iscr
imin
atio
n W
ork
inte
nsity
Dom
estic
out
sour
cing
0.
102*
-0
.006
58
.. ..
0.00
752
-0.0
0908
0.
0014
3 0.
0258
(0.0
546)
(0
.046
4)
(0.0
523)
(0
.043
8)
(0.0
452)
(0
.034
2)
Off
shor
ing
to th
e 15
EU
cou
ntrie
s 0.
104
0.01
91
0.00
759
-0.0
145
-0.1
18
-0.0
359
(0
.104
) (0
.086
5)
(0.1
00)
(0.0
862)
(0
.086
3)
(0.0
493)
O
ffsh
orin
g to
the
rest
of E
urop
e 0.
0133
-0
.154
*
0.
0852
0.
0738
0.
0699
0.
150*
*
(0.0
979)
(0
.081
7)
(0.0
990)
(0
.057
4)
(0.0
751)
(0
.064
0)
Off
shor
ing
to d
evel
opin
g co
untri
es
-0.2
06*
0.06
72
-0.1
05
-0.1
14
-0.0
746
-0.0
844*
*
(0.1
06)
(0.0
747)
(0
.076
2)
(0.1
01)
(0.0
831)
(0
.034
6)
Off
shor
ing
to o
ther
dev
elop
ed c
ount
ries
0.09
91
0.08
81
-0.2
36**
-0
.089
9 -0
.099
6 -0
.015
9
(0.0
921)
(0
.090
8)
(0.1
07)
(0.1
37)
(0.1
19)
(0.0
860)
Te
chni
cian
s and
ass
ocia
te p
rofe
ssio
nals
-0
.056
9 0.
0087
9
0.
0117
0.
210*
**
0.01
66
0.18
7***
(0.0
748)
(0
.049
5)
(0.0
588)
(0
.033
5)
(0.0
553)
(0
.054
9)
Cle
rical
supp
ort w
orke
rs
-0.1
70*
-0.0
575
0.03
89
0.26
9***
-0
.016
9 0.
132*
(0.1
03)
(0.0
770)
(0
.082
7)
(0.0
250)
(0
.072
1)
(0.0
748)
40
Serv
ice
and
sale
wor
kers
-0
.289
**
-0.1
23
0.14
3 0.
226*
**
-0.0
491
0.18
4**
(0
.133
) (0
.107
)
(0
.106
) (0
.034
2)
(0.1
03)
(0.0
902)
C
raft
and
rela
ted
trade
wor
kers
-0
.170
-0
.011
1
0.
213*
* 0.
257*
**
0.05
13
0.06
56
(0
.104
) (0
.069
9)
(0.0
853)
(0
.030
3)
(0.0
811)
(0
.075
6)
Plan
t and
mac
hine
ry o
pera
tors
-0
.096
6 0.
0215
0.
198*
**
0.32
2***
-0
.052
2 0.
155*
*
(0.0
956)
(0
.062
9)
(0.0
769)
(0
.026
1)
(0.0
679)
(0
.076
8)
Oth
er w
orke
rs
-0.2
18
0.04
25
0.29
3***
0.
222*
**
0.06
62
0.25
0***
(0.1
43)
(0.0
724)
(0
.089
1)
(0.0
327)
(0
.085
0)
(0.0
932)
N
770
770
770
770
770
770
Not
es: T
he v
aria
bles
that
cap
ture
em
ploy
ee w
ell-b
eing
are
mea
sure
d in
200
8. T
he o
utso
urci
ng m
easu
res
are
for
the
perio
d 20
01-2
006.
The
es
timat
ion
sam
ple
cons
ists
of
empl
oyee
s w
ho w
ere
empl
oyed
in
the
sam
e fir
m o
ver
the
perio
d 20
06-2
008.
The
bas
elin
e ca
tego
ry i
n al
l sp
ecifi
catio
ns i
s th
at t
he f
irm h
as n
eith
er o
utso
urce
d do
mes
tical
ly n
or o
ffsh
ored
its
core
bus
ines
s fu
nctio
ns o
ver
the
perio
d 20
01-2
006.
All
spec
ifica
tions
incl
ude
the
cont
rol v
aria
bles
that
are
list
ed in
Tab
le A
1. T
he m
odel
s al
so in
clud
e in
dica
tors
for t
he s
ecto
rs o
f the
eco
nom
y. T
he
base
line
for
occu
patio
nal g
roup
s co
nsis
ts o
f m
anag
ers
and
prof
essi
onal
s. M
argi
nal e
ffec
ts f
rom
pro
bit m
odel
s ar
e re
porte
d in
Col
umns
2-8
. St
anda
rd e
rror
s ar
e ad
just
ed f
or c
lust
erin
g at
the
leve
l of
firm
s fo
r w
hich
em
ploy
ees
wor
k. S
tatis
tical
sig
nific
ance
: ***
p<0
.01,
**
p<0.
05, *
p<
0.1
16
evanttothesurvivingemployeesbecausepreviousoutsourcingmayincreasetheunemploy-mentriskforyearstocome.
ThespecificationsdocumentedinPanelAofTable2assumethatthepotentialeffectsofout-sourcingonemployeewell-beingareuniform,irrespectiveofthegeographicaldestinationofoutsourcing.Adetailedbreakdownofoffshoringbygeographicaldestinationrevealsinterest-ingheterogeneityintheeffects(Table2,PanelB).14Offshoringtodevelopingcountrieshavesomenegativeeffectonoverallmeasureofemployeewell-being(i.e.,jobsatisfaction)(PanelB,Column1).
AnotherinterestingfindingisthatoffshoringtotheUS,Canada,andotherdevelopedcoun-tries significantlyraises survivingemployees’perceptionsofpromotionandwageprospects(Table2,PanelB,Column5).ThisobservationisreasonablebecauseFinlandisasmall,openeconomywith limitedopportunities,especially forhighlyskilledworkers.Thus,offshoring,alongwithotheraspectsofglobalization,createsopportunitiestoadvanceone’scareerbecauseiteffectivelybroadensthemarketfortalent.Offshoringamongdevelopedcountries ismostlikelytobereciprocal,andworkersinhigh-wagecountriesarecomplementsratherthansub-stitutes (Geisheckeretal.2011).Thequantitativemagnitudeof thiseffect is substantialbe-causeoffshoringtotheUS,Canada,andotherdevelopedcountriesdecreasesemployees’per-ceptions of poor promotion prospects by 24%. This result is consistent with the pattern inTable1(PanelB,Column4),accordingtowhichoffshoringtootherdevelopedcountriessub-stantiallyincreasesinternaltaskseparation,whichmeasurestheverticalmobilityofemploy-ees infirms.Therefore, thevertical fragmentationofproductioniscloselyconnectedtotheverticalmobilityofemployeesinfirmsthatoffshore.Furthermore,thereisevidenceforan-otherpositiveeffectofoffshoringonemployeewell-being:theresultssuggestthatoffshoringtodevelopingcountriesdecreasesperceivedworkintensityamongsurvivingemployees(Ta-ble2,PanelB,Column8).However,offshoringtotherestofEuropeincreasesworkintensity.
Table3documentsa separate setofestimates forknowledgeworkersbecause thisgroupofemployees is more likely to benefit from outsourcing in terms of well-being than are otherworkergroups.TheresultsinPanelArevealthatoffshoringdecreasestheprevalenceofharm (Column3).Therearealsosignificanteffectsregardingdiscrimination (Column7).However,theseeffectsarecontradictoryinthatdomesticoutsourcingincreasestheperceptionofdis-criminationamongsurvivingknowledgeworkers,butoffshoringseemstodecreaseit.Thees-timates that break down according to the geographical destination of offshoring show thatoffshoring to the15EUcountriesdecreases theperceptionofdiscrimination. It is alsono-tablethatdomesticoutsourcing,alongwithoffshoringtothe15EUcountries,improvesthelevelofjobsatisfaction(PanelB,Column1).However,negativewell-beingeffectsforknowl-edgeworkersalsoexistbecauseoffshoringtodevelopingcountriessignificantlyincreasestheperceptionofuncertainty(PanelB,Column2).Thepatterninwhichoffshoringtootherde-velopedcountriesconsiderablyimprovespromotionprospectsremainsintactforknowledgeworkers(PanelB,Column5).
Occupational Restructuring and the Well-being of Employees. The concluding section of themainestimationresultsexplorestheeffectofoccupationalrestructuringamongthecontinu-
14 We do not report the results for harm and hazard for these specifications because some cells of the data contain too few observa-tions to obtain reliable estimates.
17Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
41
TAB
LE 3
THE
EFFE
CT
OF
OU
TSO
UR
CIN
G O
N P
ERC
EIV
ED W
ELL-
BEI
NG
FO
R K
NO
WLE
DG
E W
OR
KER
S
Pane
l A
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Jo
b sa
tisfa
ctio
n U
ncer
tain
ty
Har
m
Haz
ard
No
prom
otio
n N
o vo
ice
Dis
crim
inat
ion
Wor
k in
tens
ity
D
omes
tic o
utso
urci
ng
0.12
9 0.
0308
-0
.041
1 0.
0377
0.
0579
-0
.008
31
0.09
45*
0.05
01
(0
.080
6)
(0.0
540)
(0
.035
6)
(0.0
575)
(0
.068
0)
(0.0
623)
(0
.053
2)
(0.0
449)
O
ffsh
orin
g -0
.016
6 -0
.089
9 -0
.085
4**
-0.0
655
-0.0
487
0.03
25
-0.1
47**
-0
.043
0
(0.1
04)
(0.0
797)
(0
.038
0)
(0.0
625)
(0
.074
9)
(0.0
730)
(0
.068
2)
(0.0
404)
N
421
421
421
421
421
421
421
421
Pa
nel B
(1
) (2
) (3
) (4
) (5
) (6
) (7
) (8
)
Job
satis
fact
ion
Unc
erta
inty
H
arm
H
azar
d N
o pr
omot
ion
No
voic
e D
iscr
imin
atio
n W
ork
inte
nsity
Dom
estic
out
sour
cing
0.
152*
0.
0133
..
.. 0.
0968
0.
0164
0.
104*
* 0.
0592
(0.0
796)
(0
.053
5)
(0.0
721)
(0
.064
2)
(0.0
525)
(0
.045
1)
Off
shor
ing
to th
e 15
EU
cou
ntrie
s 0.
230*
-0
.073
8
0.
0896
0.
0435
-0
.180
* -0
.014
8
(0.1
22)
(0.1
21)
(0.1
29)
(0.1
15)
(0.1
05)
(0.0
640)
O
ffsh
orin
g to
the
rest
of E
urop
e 0.
0297
-0
.231
*
-0
.058
1 0.
0872
0.
0048
2 0.
0843
(0.1
57)
(0.1
20)
(0.1
02)
(0.0
939)
(0
.106
) (0
.070
2)
Off
shor
ing
to d
evel
opin
g co
untri
es
-0.2
31
0.04
26
-0.1
23
-0.0
887
-0.1
81
-0.1
03**
*
(0.1
78)
(0.1
06)
(0.1
15)
(0.1
34)
(0.1
17)
(0.0
239)
O
ffsh
orin
g to
oth
er d
evel
oped
cou
ntrie
s -0
.008
15
0.16
9**
-0.1
75**
-0
.180
-0
.094
1 -0
.029
2
(0.0
921)
(0
.090
8)
(0.0
835)
(0
.163
) (0
.129
) (0
.084
8)
N
42
1 42
1
42
1 42
1 42
1 42
1
Not
es: T
he v
aria
bles
that
cap
ture
em
ploy
ee w
ell-b
eing
are
mea
sure
d in
200
8. T
he o
utso
urci
ng m
easu
res
are
for
the
perio
d 20
01-2
006.
The
es
timat
ion
sam
ple
cons
ists
of
empl
oyee
s w
ho w
ere
empl
oyed
in
the
sam
e fir
m o
ver
the
perio
d 20
06-2
008.
The
bas
elin
e ca
tego
ry i
n al
l sp
ecifi
catio
ns i
s th
at t
he f
irm h
as n
eith
er o
utso
urce
d do
mes
tical
ly n
or o
ffsh
ored
its
core
bus
ines
s fu
nctio
ns o
ver
the
perio
d 20
01-2
006.
All
spec
ifica
tions
inc
lude
the
con
trol
varia
bles
that
are
lis
ted
in T
able
A1.
The
mod
els
also
inc
lude
ind
icat
ors
for
the
sect
ors
of t
he e
cono
my.
M
argi
nal e
ffec
ts f
rom
pro
bit m
odel
s ar
e re
porte
d in
Col
umns
2-8
. Sta
ndar
d er
rors
are
adj
uste
d fo
r cl
uste
ring
at th
e le
vel o
f fir
ms
for
whi
ch
empl
oyee
s wor
k. S
tatis
tical
sign
ifica
nce:
***
p<0
.01,
**
p<0.
05, *
p<0
.1
Tabl
e 3
The
effe
ct o
f out
sour
cing
on
perc
eive
d w
ell-b
eing
for k
now
ledg
e w
orke
rs
Not
es: T
he v
aria
bles
that
cap
ture
em
ploy
ee w
ell-b
eing
are
mea
sure
d in
200
8. T
he o
utso
urci
ng m
easu
res
are
for t
he p
erio
d 20
01–2
006.
The
est
imat
ion
sam
ple
cons
ists
of e
mpl
oyee
s w
ho
wer
e em
ploy
ed in
the
sam
e fir
m o
ver t
he p
erio
d 20
06–2
008.
The
bas
elin
e ca
tego
ry in
all
spec
ifica
tions
is t
hat
the
firm
has
nei
ther
out
sour
ced
dom
estic
ally
nor
offs
hore
d its
cor
e bu
si-
ness
func
tions
ove
r the
per
iod
2001
–200
6. A
ll sp
ecifi
catio
ns in
clud
e th
e co
ntro
l var
iabl
es t
hat
are
liste
d in
Tab
le A
1. T
he m
odel
s al
so in
clud
e in
dica
tors
for t
he s
ecto
rs o
f the
eco
nom
y.
Mar
gina
l effe
cts
from
pro
bit
mod
els
are
repo
rted
in C
olum
ns 2
–8. S
tand
ard
erro
rs a
re a
djus
ted
for
clus
terin
g at
the
leve
l of
firm
s fo
r w
hich
em
ploy
ees
wor
k. S
tatis
tical
sig
nific
ance
: **
* p<
0.01
, **
p<0.
05, *
p<0
.1.
18
ingfirmsbetween2000and2006onsurvivingemployees’well-beingtwoyearslater,in2008(Table4).Weuseexactlythesamemeasuresofperceivedwell-beingasthedependentvaria-blesusedinTables2–3.Themostimportantfindingofthespecifications,basedonequation(3),isthatthereisgenerallynostatisticallysignificantrelationshipbetweenoccupationalre-structuringandsubsequentemployeewell-being(Table4).Thus, itseemsthatoccupationalrestructuringdoesnothavesignificantadditionalnegativeeffectsonemployeesbeyonditsdi-rectadverseeffects,documentedinTable1.ThisgeneralpatternisconsistentwiththeresultsinBöckermanetal.(2011),whohavereportedthataverageuncertaintyattheestablishmentleveldoesnotcausesignificantlossesinworksatisfactionintheFinnishcontext.
Occupational restructuring,measuredbychanges in the sharesof interactiveandnon-rou-tinetasks,significantlyreducestheexperienceoflackingavoiceintheworkplace,especiallyamongknowledgeworkers(Table4,PanelB,Column6).ThisresultisinterestingbecauseAu-toretal.(2003)stresstheimportanceofskillcontentinjobtasks.Furthermore,thereisevi-dencethatanincreaseintheshareofknowledgeworkersinafirmsignificantlyimprovesem-ployees’experienceofhavingavoiceintheworkplace(Table4,PanelB,Column6)and,con-sistentwiththatoutcome,increasesjobsatisfaction(Table4,PanelB,Column1).
Additional Aspects. Toshedmorelightontheeffectsofoffshoring,weestimatedasetofaddi-tionalspecifications.Webrieflydiscusstheseresultswithoutpresentingthemintables.Asarobustnesscheck,weperformedtheestimationsofTable1usingunweightedregressions,withandwithoutasizerestrictionforfirms(i.e.,theinclusionoffirmsemployingfewerthan100employees).ThebaselineresultsinTable1seemtoremainlargelyintactinunweightedregres-sionsandinthosewithoutasizerestriction.However,therearealsosomeimportantdiffer-ences;intheseresults,offshoringisnotnegativelyassociatedwithtaskcreationandtaskhir-ing.Furthermore,offshoringdoesnothaveapositiveimpactontheshareofknowledgework-ersinthefirms.Thus,itisimportanttouseemployment-weightedregressionstoempiricallycapturethecreativesideofoffshoring.Furthermore,theresultsinTable1(PanelB,Column1),whichsuggest thatoffshoringtodevelopingcountries leads to taskdestructionandtaskseparation,donotprevailinunweightedregressions.
OneofthestrengthsoftheISSforoutsourcingactivitiesisthatitcontainsinformationaboutfirms’self-declaredmotivationsforconductingoffshoring.Thereisevidencethattheeffectsonemployeewell-beingdiffersignificantlyaccordingtothemotivationforoffshoring.Inpar-ticular,animportantresultinTable2(PanelB,Column5),whichrevealsthatoffshoringsig-nificantly improves surviving employees’ perception of promotion prospects, prevails onlywhenoffshoringismotivatedbyopeningnewmarketsforproductsandservicesratherthanbyeffortstoreducelaborcosts.(Furthermore,thereisasignificantdecreaseintheperceptionofdiscrimination.)Thisfindingislogicalbecausethistypeofoffshoringconstitutessubstan-tialopportunitiesforcareeradvancement,especiallyforknowledgeworkers.
Finally,wefind that insourcing(i.e., theoppositeofoffshoring)generally improvesemployeewell-being. In particular, the results suggest that insourcing significantly decreases the likeli-hoodofperceivedharmsandhazardsintheworkplace.ThisfindingisreasonablebecausethecoststructureishigherinFinlandthaninseveralothercountriesthatwerepreviouslylocationsfortheseactivities.ThetypesofjobsthatareinsourcedtoFinlandarehigh-qualityjobswithhighwagesandamenitiesthatsupporttheperceptionofgoodworkingconditionsamongtheaffect-edemployees.Thereisalsosomeevidencethatinsourcingsupportsoverallsatisfactionatwork.
19Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
42
TAB
LE 4
THE
EFFE
CT
OF
OC
CU
PATI
ON
AL
RES
TRU
CTU
RIN
G O
N P
ERC
EIV
ED W
ELL-
BEI
NG
Pane
l A: A
ll em
ploy
ees
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Jo
b sa
tisfa
ctio
n U
ncer
tain
ty
Har
m
Haz
ard
No
prom
otio
n N
o vo
ice
Dis
crim
inat
ion
Wor
k in
tens
ity
Ta
sk d
estru
ctio
n -0
.030
5 0.
0311
-0
.008
53
-0.0
0628
0.
0033
9 -0
.039
3 0.
0035
1 0.
0241
Ta
sk se
para
tion
-0.0
578
0.04
15
0.01
11
-0.0
201
-0.0
347
-0.0
211
0.05
22
0.04
06
Exte
rnal
task
sepa
ratio
n -0
.061
1 0.
0518
0.
0064
0 -0
.037
8 -0
.014
8 -0
.007
28
0.00
871
-0.0
0627
In
tern
al ta
sk se
para
tion
(i.e.
, int
erna
l ta
sk h
iring
) -0
.032
3 -0
.010
6 0.
0268
0.
0512
-0
.103
-0
.072
7 0.
216*
0.
194*
**
Exce
ss ta
sk re
allo
catio
n -0
.107
0.
0310
-0
.020
1 0.
0330
0.
0244
-0
.031
9 0.
0207
0.
0286
W
orke
r chu
rnin
g -0
.046
9 0.
0226
0.
0259
-0
.020
8 -0
.053
6 0.
0159
0.
0717
0.
0303
Th
e ch
ange
in th
e sh
are
of in
tera
ctiv
e ta
sks
-0.0
772
-0.6
03**
-0
.032
4 0.
332
-0.0
773
-0.4
60*
-0.0
422
-0.1
42
The
chan
ge in
the
shar
e of
non
-rou
tine
task
s 0.
121
-0.3
95**
0.
0956
0.
288
-0.0
578
-0.2
58
-0.0
0415
-0
.016
4
Task
cre
atio
n -0
.010
8 0.
0389
0.
0015
3 0.
0247
-0
.015
3 -0
.000
434
0.00
171
-0.0
118
Task
hiri
ng
-0.0
262
0.05
61
0.00
890
0.02
64
-0.0
338
0.00
352
0.02
07
-0.0
0750
Th
e ch
ange
in th
e sh
are
of k
now
ledg
e w
orke
rs
0.17
0 -0
.106
-0
.018
7 -0
.037
0 0.
0008
36
-0.2
12**
-0
.027
3 0.
0200
Pa
nel B
: Kno
wle
dge
wor
kers
(1
) (2
) (3
) (4
) (5
) (6
) (7
) (8
)
Job
satis
fact
ion
Unc
erta
inty
H
arm
H
azar
d N
o pr
omot
ion
No
voic
e D
iscr
imin
atio
n W
ork
inte
nsity
Task
des
truct
ion
0.03
96
-0.0
0084
5 0.
0342
0.
0022
6 -0
.043
9 -0
.082
1 -0
.069
6 -0
.043
2 Ta
sk se
para
tion
-0.0
521
0.02
82
0.06
91
0.03
19
-0.0
0474
-0
.044
6 0.
0459
-0
.009
26
Exte
rnal
task
sepa
ratio
n -0
.050
5 0.
0301
0.
0762
0.
0072
4 -0
.002
56
-0.0
382
-0.0
0134
-0
.060
7 In
tern
al ta
sk se
para
tion
(i.e.
, int
erna
l ta
sk h
iring
) -0
.054
3 0.
0180
0.
0298
0.
114
-0.0
117
-0.0
653
0.21
2 0.
128
Exce
ss ta
sk re
allo
catio
n -0
.044
5 0.
0462
0.
0399
0.
0423
0.
0947
0.
0052
1 -0
.010
9 0.
0392
W
orke
r chu
rnin
g -0
.131
0.
0458
0.
0650
0.
0458
0.
0458
0.
0328
0.
153*
* 0.
0287
Th
e ch
ange
in th
e sh
are
of in
tera
ctiv
e ta
sks
-0.1
51
-0.5
55*
0.14
6 0.
181
-0.0
630
-1.1
81**
* 0.
0087
4 -0
.289
The
chan
ge in
the
shar
e of
non
-rou
tine
task
s 0.
250
-0.3
86*
0.12
8 0.
223
-0.2
02
-0.8
03**
* -0
.136
-0
.089
6
Task
cre
atio
n -0
.019
2 0.
0424
-0
.000
484
0.03
72
0.03
58
0.04
50
0.00
444
0.01
85
Task
hiri
ng
-0.0
564
0.06
69
0.01
55
0.06
01
0.05
80
0.06
70
0.04
15
0.03
15
The
chan
ge in
the
shar
e of
kno
wle
dge
wor
kers
0.
360*
-0
.175
-0
.010
3 -0
.042
0 -0
.075
4 -0
.459
***
-0.1
33
-0.0
302
Tabl
e 4
The
effe
ct o
f occ
upat
iona
l res
truc
turi
ng o
n pe
rcei
ved
wel
l-bei
ng
Not
es: T
he v
aria
bles
that
cap
ture
em
ploy
ee w
ell-b
eing
are
mea
sure
d in
200
8. T
he m
easu
res
for o
ccup
atio
nal r
estr
uctu
ring
are
for t
he p
erio
d 20
00–2
006
and
are
calc
ulat
ed o
nly
for c
on-
tinuo
us fi
rms.
The
sam
ple
cons
ists
of e
mpl
oyee
s w
ho w
ere
empl
oyed
in th
e sa
me
firm
ove
r the
per
iod
2006
–200
8. E
ach
cell
of th
e ta
ble
repo
rts
the
para
met
er e
stim
ate
from
a s
epar
ate
spec
ifica
tion.
All
mod
els
incl
ude
the
cont
rol v
aria
bles
that
are
list
ed in
Tab
le A
1. M
argi
nal e
ffect
s fr
om p
robi
t mod
els
are
repo
rted
in C
olum
ns 2
–8. T
he s
ampl
e si
ze is
1,1
74 in
all
spec
ifica
-tio
ns. T
he u
nrep
orte
d st
anda
rd e
rror
s ar
e ad
just
ed fo
r clu
ster
ing
at th
e le
vel o
f firm
s fo
r whi
ch e
mpl
oyee
s w
ork.
Sta
tistic
al s
igni
fican
ce: *
** p
<0.0
1, *
* p<
0.05
, * p
<0.1
.
20
6 ConclusionsThispaperexaminestheeffectsofoutsourcingonvariousmeasuresofemployeewell-beingintheFinnishcontext.Thewell-beinglossescausedbytheverticalfragmentationofproductionpotentiallyconstituteanimportantpartoftheshort-runadjustmentcoststoemployees,andtheycanexplainthepersistentresistancetooutsourcing.Weuseparticularlyrichmatchedda-tathatcombineafirm-levelsurveyofoutsourcingwithasurveyofemployeesthatcontainsdetailedinformationonseveralaspectsofsubjectivewell-being.Furthermore,weanalyzetheconnectionofoutsourcingtocomprehensivemeasuresofoccupationalrestructuring.
Asidefromthedirectnegativeeffectofoffshoringonemployees(attributabletogreater jobdestructionandworkeroutflow),basedontheevidence,therelationshipbetweenoutsourcingandemployeewell-beingiscomplex.Themainfindingofthispaperisthattheresultsstrong-lypointtothesubstantialheterogeneityintheeffectsofoffshoring.Forexample,wefindthattherelationshipbetweenoutsourcingandperceivedwell-beingdiffersconsiderablyaccordingtothegeographicaldestinationofoffshoring.Thereissomeevidencethatoffshoringtodevel-opingcountriesreducesoverallsatisfactionatwork.Oneexplanationforthisoutcomeisthatoffshoringtolow-wagecountriessubstitutesfordomesticemployment(HarrisonandMcMil-lan2011).
Aside from these negative effects, offshoring also has plausible positive effects on employ-eewell-beingthathavelargelybeenoverlookedintheexistingliterature.Wedocumentthathigheroccupationalstatusclearlyimproveswell-beingatwork,andoffshoringconsiderablyincreasestheshareofknowledgeworkersinfirms.Importantly,inadditiontothisdirectcom-positioneffect,thereisalsoevidencefortheexistenceofpositiveindependenteffects.There-fore,evengiventheprevailingstructureofdifferentoccupationsinthefirms,anincreaseintheshareofknowledgeworkersimprovessomeimportantaspectsofperceivedemployeewell-being.
Furthermore, we find that offshoring to other developed countries improves surviving em-ployees’promotionandsubsequentwageprospects.Theseeffectsareparticularlypronouncedforknowledgeworkersandwhenoffshoringhasbeenmotivatedbyopeningnewmarketsforproductsandservices.TheseeffectsareconsistentwiththefindingsbyHickmanandOlney(2011),whoarguethatemployeeshaverespondedtooffshoringbyincreasingtheirstockofhumancapitalbyacquiringbettereducationintheU.S.context.Bettereducationcreatesop-portunities for careeradvancementbecause themarket for talentedworkers is larger (Kau-hanenandNapari2011).Thefactthatpromotionprospectsareparticularlysensitivetooff-shoring is also reasonable because harms and hazards are closely related to the fixed stockofcapital thatconstitutesthephysicalworkenvironment,whichdoesnotchangerapidly infirms.Incontrast,promotionprospectsarerelatedtoexpectationsthatcanchangerapidlyasafirmchanges.Therefore,thebottomlineofthefindingsisthatoffshoringnotonlyhasnega-tiveeffectsonthewell-beingofsurvivingemployees,butitseffectsdiffersubstantiallybythetypeofoffshoringandbyoutcomes.
Astraightforwardgeneralizationofourresultsatthelevelofthewholeeconomyinvolvesapo-tentialfallacyofcomposition.Theestimatedpositivewell-beingeffectsonsurvivingemploy-eesdonotprovideacompletepictureofthetotalimpactofoffshoringonwell-beingbecause
21Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
thosewhoendupunemployedareexcluded.Therefore,empirically,abroaderandmorebal-ancedpicturewouldrequireanalysesofwhathappenstothoseindividualswholosetheirjobsduetooffshoring.Whatisthequalityofjobsforwhichtheyarehired?Theempiricalevidenceis somewhat reassuring.A largemajorityof theunemployedwill findanew jobeventually,andthenewlycreatedjobsareusuallymoreproductivethanthedestroyedoldjobs.Forexam-ple,previousFinnishevidencesuggeststhatasignificantproportionofaggregateproductivitygrowthcanbeattributedtothecreationofnewjobsandthedestructionofoldjobs,atleastinmanufacturing(Malirantaetal.2010).Incontrast,focusingonthepost-recessionyears1992–1997,IlmakunnasandMaliranta(2004)showthatoldandlow-productivityplantshavehighseparation rates to unemployment, and new and high-productivity plants have high hiringratesfromunemployment.Intermsofsocialpolicy,theprimarychallengeistobothstrength-enthepositiveeffectsofoffshoring-triggeredrestructuringandtofacilitateadjustmenttothenegativeimpacts,includinggreaterturbulenceandpolarizationinthelabormarkets.
22
Appendix
44
APPENDIX
TABLE A1
DEFINITIONS OF VARIABLES
Variable Definition/measurement The measures of perceived employee well-being (QWLS)
Job satisfaction Job satisfaction is measured by means of alternatives 1 (very satisfied), 2
(quite satisfied), 3 (rather dissatisfied), and 4 (very dissatisfied). Uncertainty Work including at least one insecurity factor (includes transfer to other duties,
threat of temporary dismissal, threat of permanent dismissal, threat of unemployment, threat of becoming incapable of work, unforeseen changes, work load increasing beyond tolerance) = 1, otherwise = 0.
Harm At least one adverse factor that affects work ‘very much’ (includes heat, cold, vibration, draft, noise, smoke, gas and fumes, humidity, dry indoor air, dust, dirtiness of work environment, poor or glaring lighting, irritating or corrosive substances, restless work environment, repetitive and monotonous movements, difficult or uncomfortable working positions, time pressure and tight time schedules, heavy lifting, lack of space, mildew in buildings) = 1, otherwise = 0.
Hazard At least one factor experienced as ‘a distinct hazard’ (includes accident risk, becoming subject to physical violence, hazards caused by chemical substances, radiation hazard, major catastrophe hazard, hazard of infectious diseases, hazard of skin diseases, cancer risk, risk of strain injuries, risk of succumbing to mental disturbance, risk of grave work exhaustion, risk of causing serious injury to others, risk of causing serious damage to valuable equipment or product) = 1, otherwise = 0.
No promotion Advancement opportunities in current workplace ‘poor’ = 1, otherwise = 0. No voice ‘Not at all’ able to influence at least one factor at work (includes content of
tasks, order in which tasks are completed, pace of work, working methods, division of tasks between employees, choice of working partners, equipment purchases) = 1, otherwise = 0.
Discrimination Experience of at least one type of unequal treatment or discrimination in current workplace (includes time of hiring, remuneration, career advancement opportunities, access to training arranged by employer, receiving information, attitudes of co-workers or superiors) = 1, otherwise = 0.
Work intensity Intensity at work is high enough to cause sickness absence = 1, otherwise 0.
The measures of outsourcing (ISS)
Domestic outsourcing Firm has domestically outsourced its core business functions (i.e.,
production of goods and/or services) over the period 2001-2006 = 1, otherwise 0.
Offshoring (i.e. international outsourcing)
Firm has offshored abroad its core business functions over the period 2001-2006 = 1, otherwise 0.
Offshoring to the 15 EU countries
Firm has offshored its core business functions to the 15 EU countries over the period 2001-2006 = 1, otherwise 0. The EU 15 countries are Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal, Sweden, and the United Kingdom. Finland is excluded from the list of the EU 15 countries.
Offshoring to the rest of Europe Firm has offshored its core business functions to the rest of Europe over the period 2001-2006 = 1, otherwise 0. The rest of Europe includes 12 EU countries (i.e., Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, Slovak Republic, Bulgaria, and Romania) and Switzerland, Norway, Turkey, Russia, Belo Russia, Ukraine, and the Balkan states.
Offshoring to developing countries
Firm has offshored its core business functions to developing countries over the period 2001-2006 = 1, otherwise 0. The developing countries include China, India, South and Central America (including Mexico), and Africa.
Offshoring to other developed countries
Firm has offshored its core business functions to other developed countries over the period 2001-2006 = 1, otherwise 0. The other
Table A1 Definitions of variables
23Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
45
developed countries include the US, Canada, Japan, Korea, the countries of the Near East and Far East, and Oceania.
Control variables Human capital (QWLS) Female 1 = female, 0 = male. Age <=34 Age <= 34 = 1, otherwise = 0. Age 35-44 Age 35-44 = 1, otherwise = 0 (reference) Age 45-54 Age 45-54 = 1, otherwise = 0 Age 55-64 Age 55-64 = 1, otherwise = 0 Married Married = 1, otherwise = 0. Basic education only Less than second stage of secondary level education (International
Standard Classification of Education (ISCED) 0-2) = 1, otherwise = 0 (reference).
Middle education Second stage of secondary level education (ISCED 3) = 1, otherwise = 0 Higher education Third-level education (ISCED 5-7) = 1, otherwise = 0 Union member Member of trade union = 1, otherwise = 0. Work history (FLEED) Past earnings A logarithm of past average earnings over the period 1990-2007, deflated
to the year 2000 by using the consumer price index. Past employment The total number of employment months over the period 1990-2007. Past unemployment The total number of unemployment months over the period 1990-2007. Self-assessed health (QWLS) Self-assessment of working capacity. The variable is scaled from 0 (total
inability to work) to 10 (top condition). Employer characteristics (QWLS)
Plant size <100 Size of plant under 100 employees = 1, otherwise = 0 (reference) Plant size 100-249 Size of plant 100-249 employees = 1, otherwise = 0 Plant size 250-999 Size of plant 250-999 employees = 1, otherwise = 0 Plant size > 1000 Size of plant over 1000 employees = 1, otherwise = 0
Note: The measures of occupational restructuring are defined in the text. Note: The measures of occupational restructuring are defined in the text.
44
APPENDIX
TABLE A1
DEFINITIONS OF VARIABLES
Variable Definition/measurement The measures of perceived employee well-being (QWLS)
Job satisfaction Job satisfaction is measured by means of alternatives 1 (very satisfied), 2
(quite satisfied), 3 (rather dissatisfied), and 4 (very dissatisfied). Uncertainty Work including at least one insecurity factor (includes transfer to other duties,
threat of temporary dismissal, threat of permanent dismissal, threat of unemployment, threat of becoming incapable of work, unforeseen changes, work load increasing beyond tolerance) = 1, otherwise = 0.
Harm At least one adverse factor that affects work ‘very much’ (includes heat, cold, vibration, draft, noise, smoke, gas and fumes, humidity, dry indoor air, dust, dirtiness of work environment, poor or glaring lighting, irritating or corrosive substances, restless work environment, repetitive and monotonous movements, difficult or uncomfortable working positions, time pressure and tight time schedules, heavy lifting, lack of space, mildew in buildings) = 1, otherwise = 0.
Hazard At least one factor experienced as ‘a distinct hazard’ (includes accident risk, becoming subject to physical violence, hazards caused by chemical substances, radiation hazard, major catastrophe hazard, hazard of infectious diseases, hazard of skin diseases, cancer risk, risk of strain injuries, risk of succumbing to mental disturbance, risk of grave work exhaustion, risk of causing serious injury to others, risk of causing serious damage to valuable equipment or product) = 1, otherwise = 0.
No promotion Advancement opportunities in current workplace ‘poor’ = 1, otherwise = 0. No voice ‘Not at all’ able to influence at least one factor at work (includes content of
tasks, order in which tasks are completed, pace of work, working methods, division of tasks between employees, choice of working partners, equipment purchases) = 1, otherwise = 0.
Discrimination Experience of at least one type of unequal treatment or discrimination in current workplace (includes time of hiring, remuneration, career advancement opportunities, access to training arranged by employer, receiving information, attitudes of co-workers or superiors) = 1, otherwise = 0.
Work intensity Intensity at work is high enough to cause sickness absence = 1, otherwise 0.
The measures of outsourcing (ISS)
Domestic outsourcing Firm has domestically outsourced its core business functions (i.e.,
production of goods and/or services) over the period 2001-2006 = 1, otherwise 0.
Offshoring (i.e. international outsourcing)
Firm has offshored abroad its core business functions over the period 2001-2006 = 1, otherwise 0.
Offshoring to the 15 EU countries
Firm has offshored its core business functions to the 15 EU countries over the period 2001-2006 = 1, otherwise 0. The EU 15 countries are Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal, Sweden, and the United Kingdom. Finland is excluded from the list of the EU 15 countries.
Offshoring to the rest of Europe Firm has offshored its core business functions to the rest of Europe over the period 2001-2006 = 1, otherwise 0. The rest of Europe includes 12 EU countries (i.e., Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, Slovak Republic, Bulgaria, and Romania) and Switzerland, Norway, Turkey, Russia, Belo Russia, Ukraine, and the Balkan states.
Offshoring to developing countries
Firm has offshored its core business functions to developing countries over the period 2001-2006 = 1, otherwise 0. The developing countries include China, India, South and Central America (including Mexico), and Africa.
Offshoring to other developed countries
Firm has offshored its core business functions to other developed countries over the period 2001-2006 = 1, otherwise 0. The other
24
Table A2 Selected descriptive statistics for the linked data sets
46
TABLE A2
SELECTED DESCRIPTIVE STATISTICS FOR THE LINKED DATA SETS
Firm-level data on outsourcing and restructuring
Individual-level data on outsourcing and well-being
Individual-level data on restructuring and well-being
N Weighted N Mean N Mean N Mean
Outsourcing variables (ISS)
Domestic outsourcing 1096 353 698 0.222 770 0.209
Offshoring 1096 353 698 0.147 770 0.138
Offshoring to the 15 EU countries 1096 353 698 0.222 770 0.209
Offshoring to the rest of Europe 1096 353 698 0.052 770 0.044
Offshoring to developing countries 1096 353 698 0.083 770 0.081
Offshoring to other developed countries 1096 353 698 0.063 770 0.057
Occupational restructuring variables (FLEED)
Task destruction 1096 353 698 0.204 1174 0.189
Task separation 1096 353 698 0.562 1174 0.506
External task separation 1096 353 698 0.394 1174 0.354
Internal task separation (i.e., internal task hiring) 1096 353 698 0.167 1174 0.152
Excess task reallocation 1096 353 698 0.170 1174 0.212
Task churning 1096 353 698 0.714 1174 0.635
The change in the share of interactive tasks 1096 353 698 0.007 1171 0.008
The change in the share of non-routine tasks 1096 353 698 0.014 1171 0.012
Task creation 1096 353 698 0.387 1174 0.472
Task hiring 1096 353 698 0.744 1174 0.789
The change in the share of knowledge workers 1096 353 698 0.022 1174 0.009
The share of knowledge workers in 2006 1096 353 698 0.476 1174 0.461
Well-being variables (QWLS)
Job satisfaction 770 4.048 1174 4.072
47
Uncertainty 770 0.723 1174 0.664
Harm 770 0.281 1174 0.245
Hazard 770 0.397 1174 0.365
No promotion 770 0.418 1174 0.486
No voice 770 0.705 1174 0.677
Discrimination 770 0.377 1174 0.343
Work intensity 770 0.169 1165 0.121
Occupational share variables (FLEED)
Technicians and associate professionals 770 0.216 1174 0.195
Clerical support workers 770 0.110 1174 0.092
Service and sale workers 770 0.078 1174 0.102
Craft and related trade workers 770 0.129 1174 0.164
Plant and machinery operators 770 0.169 1174 0.172
Other workers 770 0.078 1174 0.067
25Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
Tabl
e A
3 Co
rrel
atio
n be
twee
n w
orki
ng c
ondi
tion
var
iabl
es
Not
e: n
.s. m
eans
that
the
corr
elat
ion
coef
ficie
nt is
not
sta
tistic
ally
sig
nific
ant a
t the
sta
ndar
d 5%
leve
l.
48
TAB
LE A
3
CO
RR
ELA
TIO
N B
ETW
EEN
WO
RK
ING
CO
ND
ITIO
N V
AR
IAB
LES
Jo
b sa
tisfa
ctio
n U
ncer
tain
ty
Har
m
Haz
ard
No
prom
otio
n N
o vo
ice
Dis
crim
inat
ion
Wor
k in
tens
ity
Job
satis
fact
ion
1
Unc
erta
inty
-0
.195
1
Har
m
-0.1
84
0.21
2 1
Haz
ard
-0.1
62
0.23
5 0.
391
1
No
prom
otio
n -0
.194
n.
s. 0.
139
0.12
4 1
No
voic
e -0
.143
0.
097
0.19
5 0.
199
0.27
7 1
Dis
crim
inat
ion
-0.2
07
0.20
5 0.
153
0.14
7 0.
124
0.12
1 1
Wor
k in
tens
ity
-0.1
55
0.15
5 0.
220
0.22
2 0.
089
0.22
2 0.
158
1
Not
e: n
.s. m
eans
that
the
corr
elat
ion
coef
ficie
nt is
not
stat
istic
ally
sign
ifica
nt a
t the
stan
dard
5%
leve
l.
26
References Abowd, John M., Francis Kramarz, and David N. Margolis. 1999. “High Wage Workers and High Wage Firms.” Econometrica 67(March): 251–333.
Ali-Yrkkö, Jyrki. 2007. “Tuotannon ja T&K-toiminnan ulkoistaminen – motiivit ja onnistuminen.” Discussion Paper No. 1071. Helsinki: The Research Institute of the Finnish Economy.
Ali-Yrkkö, Jyrki, Petri Rouvinen, Timo Seppälä, and Pekka Ylä-Anttila. 2011. “Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone.” Journal of Industry, Competition and Trade 11(3): 263–278.
Askenazy, Philippe, and Eva Moreno Galbis. 2007. “The Impact of Technological and Organizational Changes on Labor Flows. Evidence on French Establishments.” Labour: Review of Labour Economics and Industrial Relations 21(2): 265–301.
Autor, David H., Frank Levy, and Richard J. Murmane. 2003. “The Skill Content of Recent Technological Change: An Empirical Exploration.” Quarterly Journal of Economics 118(November): 1279–1333.
Bagger, Jesper, Bent Jesper Christensen, and Dale T. Mortensen. 2010. “Wage and Productivity Dispersion: Labour Quality or Rent Sharing?” Royal Holloway, University of London.
Baldwin, Richard. 2006. Globalisation: The Great Unbundling(s). Helsinki: Economic Council of Finland, Prime Minister’s Office.
Bauer, Thomas K., and Stefan Bender. 2004. “Technological Change, Organizational Change, and Job Turnover.” Labour Economics 11(June): 265–291.
Becker, Sascha O., Karolina Ekholm, and Marc-Andreas Muendler. 2009. “Offshoring and the Onshore Composition of Occupations, Tasks and Skills.” Discussion Paper No. 7391. London: Centre for Economic Policy Research.
Blinder, Alan S. 2006. “Offshoring: The Next Industrial Revolution.” Foreign Affairs 85(March/April): 113–128.
Burgess, Simon, Julia Lane, and David Stevens. 2000. “Job Flows, Worker Flows, and Churning.” Journal of Labor Economics 18(July): 473–502.
Böckerman, Petri, and Pekka Ilmakunnas. 2008. “Interaction of Working Conditions, Job Satisfaction, and Sickness Absences: Evidence from a Representative Sample of Employees.” Social Science and Medicine 67(August): 520–528.
Böckerman, Petri, Pekka Ilmakunnas, and Edvard Johansson. 2011. “Job Security and Employee Well-being: Evidence from Matched Survey and Register Data.” Labour Economics 18(August): 547–554.
Clark, Andrew E. 1996. “Job Satisfaction in Britain.” British Journal of Industrial Relations 34(June): 189–217.
Crinò, Rosario. 2009. “Offshoring, Multinationals and Labour Market: A Review of the Empirical Literature.” Journal of Economic Surveys 23(April): 197–249.
Davis, Steven J., and John Haltiwanger. 1999. “Gross Job Flows.” In Handbook of Labor Economics, Volume 3B, edited by Orley Ashenfelter and David Card, pp. 2711–2805. Amsterdam: Elsevier.
Eriksson, Tor. 2010. “Labour Market Outcomes of Internationalization – What Have We Learnt from
27Outsourcing, Occupational Restructuring, and Employee Well-being: Is There a Silver Lining?
Analyses of Microdata on Firms and Their Employees?” In Wage Structures, Employment Adjustment and Globalization, edited by David Marsden and Francois Rycx, pp. 221–243. New York: Palgrave Macmillan.
Geishecker, Ingo. 2008. “The Impact of International Outsourcing on Individual Employment Security: A Micro-level Analysis.” Labour Economics 15(June): 291–314.
Geishecker, Ingo, Maximilian Riedl, and Paul Frijters. 2011. “Offshoring and Job Loss Fears: An Econometric Analysis of Individual Perceptions.” Georg-August-Universität Göttingen.
Griliches, Zvi, and Jerry A. Hausman. 1986. “Errors in Variables in Panel Data.” Journal of Econometrics 31(February): 93–118.
Harrison, Ann, and Margaret McMillan. 2011. “Offshoring Jobs? Multinationals and U.S. Manufacturing Employment.” Review of Economics and Statistics 93(August): 857–875.
Hickman, Daniel C., and William W. Olney. 2011. “Globalization and Investment in Human Capital.” Industrial and Labor Relations Review 64(July): 654–672.
Hopp, Wallace J., Seyed M. R. Iravani, and Fang Liu. 2009. “Managing White-collar Work: An Operations-oriented Survey.” Production and Operations Management 18(1): 1–32.
Ilmakunnas, Pekka, and Mika Maliranta. 2004. “Hiring from Unemployment and Separation to Unemployment.” Applied Economics Letters 11(2): 91–95.
Ilmakunnas, Pekka, and Mika Maliranta. 2005. “Worker Inflow, Outflow, and Churning.” Applied Economics 37(10): 1115–1133.
Ilmakunnas, Pekka, and Mika Maliranta. 2011. “Suomen työpaikka- ja työntekijävirtojen käänteitä: Toimialojen elinkaaret ja finanssikriisit.” Työpoliittinen aikakauskirja 54(2): 6–23.
Kauhanen, Antti, and Sami Napari. 2011. “Career and Wage Dynamics: Evidence from Linked Employer-employee Data.” Research in Labor Economics, Forthcoming.
Lechner, Michael, and Conny Wunsch. (2011). “Sensitivity of Matching-based Program Evaluations to the Availability of Control Variables.” Discussion Paper No. 5553. Bonn: Institute for the Study of Labor.
Lehto, Anna-Maija, and Hanna Sutela. 2009. Three Decades of Working Conditions. Findings of Finnish Quality of Work Life Surveys 1977–2008. Statistics Finland: Helsinki.
Linden, Greg, Kenneth L. Kraemer, and Jason Dedrick. 2007. “Who Captures Value in a Global Innovation System? The case of Apple’s iPod.” University of California, Irvine.
Lurweg, Maren. 2010. “Perceived Job Insecurity, Unemployment Risk and International Trade – A Micro-level Analysis of Employees in German Service Industries.” DIW Berlin: SOEP Papers on Multidisciplinary Panel Data Research No. 300.
Maertz Jr, Carl P., Jack W. Wiley, Cynthia LeRouge, and Michael A. Campion. 2009. “Downsizing Effects on Survivors: Layoffs, Offshoring, and Outsourcing.” Industrial Relations 49(April): 275–285.
Maliranta, Mika. 2009. “Työpaikka- ja työntekijävirrat ja tehtävärakenteiden dynamiikka Suomen yrityssektorilla.” Discussion Paper No. 1177. Helsinki: The Research Institute of the Finnish Economy.
Maliranta, Mika. 2011. “Globalization, Occupational Restructuring and Firm Productivity.” Discussion Paper No. XXXX. Helsinki: The Research Institute of the Finnish Economy.
28
Maliranta, Mika, Petri Rouvinen, and Pekka Ylä-Anttila. 2010. “Finland’s Path to Global Productivity Frontiers Through Creative Destruction.” International Productivity Monitor 20(10): 68–84.
Malone, Thomas W., Robert J. Laubacher, and Tammy Johns. 2011. “The Age of Hyperspecialization.” Harvard Business Review July–August, 56–65.
Munch, Jakob R. 2010. “Whose Job Goes Abroad? International Outsourcing and Individual Job Separations.” Scandinavian Journal of Economics 112(2): 339–360.
Nilsson Hakkala, Katariina, Fredrik Heyman, and Fredrik Sjöholm. 2009. “Multinational Firms and Job Tasks.” Working Paper No. 8/2009. Helsinki: Government Institute for Economic Research.
Østhus, Ståle, and Arne Mastekaasa. 2010. “The Impact of Downsizing on Remaining Workers’ Sickness Absence.” Social Science and Medicine 71(October): 1455–1462.
Sacks, Daniel W., Betsey Stevenson, and Justin Wolfers. 2010. “Subjective Well-being, Income, Economic Development and Growth.” Discussion Paper No. 8048. London: Centre for Economic Policy Research.
Scheve, Kenneth, and Matthew J. Slaughter. 2004. “Economic Insecurity and the Globalization of Production.” American Journal of Political Science 48(October): 662–674.
Statistics Denmark, Statistics Finland, Statistics Netherlands, Statistics Norway, and Statistics Sweden. 2008. International Sourcing. Moving Business Functions Abroad. Copenhagen: Statistics Denmark. Available at http://www.dst.dk/publikation.aspx?cid=13110
Stevenson, Betsey, and Justin Wolfers. 2008. “Economic Growth and Subjective Well-being: Reassessing the Easterlin Paradox.” Brookings Papers on Economic Activity 1:1–87.
Wagner, Joachim. 2011. “Productivity and International Firm Activities: What Do We Know?” IZA Policy Paper No. 23. Bonn: Institute for the Study of Labor.