Outsourcing of labor services grew substantially during the 1980s and 1990s and was associated with lower wages, fewer benefits, and lower rates of unionization. The authors focus on two occupations for which they can identify outsourcing in those two decades using industry and occupation codes: janitors and guards. Across a wide array of specifications, they find that the outsourcing wage penalty ranged from 4% to 7% for janitors and from 8% to 24% for guards. Their findings on health benefits mirror those on wages.
Does Outsourcing Reduce Wages in the LowWage Service Occupations? Evidence from Janitors and GuardsArindrajit Dube and Ethan Kaplan ,
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Industrial and Labor Relations Review