Impact of International Outsourcing on Domestic Wage of Singapore Manufacturing Sector

Abstract

This study focuses on measuring the extent of international outsourcing across Singapore manufacturing sector and the impact on domestic wages of workers. Based on the framework of Feenstra and Hanson (1999), this study measured the narrow and wide outsourcing from the overseas intermediate imports. In estimating the impact of international outsourcing on wage, this study reviews the model developed by Geishecker and Görg (2008) and modifies the same by incorporating the parametric stability approach of Hamilton’s (1989) Markov Switching model. Results after incorporating the nonlinearity, indicates that outsourcing dynamics can be better understood through modified framework developed.