Outsourcing and low-skilled workers in the UK

Abstract

Outsourcing is proxied by constructing import penetration terms for groups of countries (distinguishing between imports from industrialized countries and imports from low-wage countries) for each four-digit industry within the broader categories of textiles and non-electrical machinery. The results show that imports from low-wage countries have made a significant contribution to the decline in the wage-bill share and relative employment of the less-skilled in the UK. The degree of outsourcing may differ between industries, and large currency appreciations may have a disproportionately large impact on the economic fortunes of the less-skilled.