Vertical disintegration and training: Evidence from a matched employer-employee survey

Elisabetta Magnani*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

The mechanism through which outsourcing favourably impacts on workplace performance, particularly productivity, is still unclear. I explore the hypothesis that it does so by impacting workers' training. I use AWIRS-1995, a matched employer-employee survey that reports ample information on the extent of technology and organizational change in Australian workplaces. I find that there is a positive and significant impact of outsourcing on training when I do not control for the correlation between ununobservable factors in these two binary outcomes. However, once I control for this correlation using a bivariate probit estimator, the training impact of outsourcing becomes negative. I then assess the sensitivity of the outsourcing effect to endogeneity by using the method advocated by Altonji et al. (J Polit Econ 113(1):151-184, 2005) to find that this latter result persists even in the presence of a low correlation between unobservables.

Original languageEnglish
Pages (from-to)199-217
Number of pages19
JournalJournal of Productivity Analysis
Volume38
Issue number2
DOIs
Publication statusPublished - Oct 2012
Externally publishedYes

Keywords

  • Older workers
  • Organizational change
  • Outsourcing
  • Training
  • Vertical disintegration

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