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  3. American Economic Review
  4. December 2005
  5. The Impact of Outsourcing to China on Hong Kong's Labor Market

The Impact of Outsourcing to China on Hong Kong's Labor Market

  • Chang-Tai Hsieh
  • Keong T. Woo
American Economic Review
vol. 95, no. 5, December 2005
(pp. 1673-1687)
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Abstract

We measure the impact of China's decision to open its economy in 1980 on outsourcing from Hong Kong and the relative demand for less-skilled workers. We show that the relative demand for skilled workers in Hong Kong increased at the same time outsourcing to China began to increase. The reallocation of workers from manufacturing to "outsourcing services" can account for 15 percent, and increased utilization of skilled workers within manufacturing industries for 30 percent, of the aggregate relative demand shift. In addition, the rate of skill upgrading has been greater in manufacturing industries that have seen a greater degree of outsourcing to China.

Citation

Hsieh, Chang-Tai, and Keong T. Woo. 2005. "The Impact of Outsourcing to China on Hong Kong's Labor Market." American Economic Review, 95 (5): 1673-1687. DOI: 10.1257/000282805775014272

Additional Materials

JEL Classification

  • J23 Labor Demand
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 Wage Level and Structure; Wage Differentials
  • L24 Contracting Out; Joint Ventures; Technology Licensing
  • M55 Personnel Economics: Labor Contracting Devices
  • P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid