Three Essays on Job Loss Fears and Offshoring
Maximilian Riedl
Cumulative thesis
Date of Examination:
2013-11-28
Date of issue:
2014-02-11
Advisor:
Geishecker, Ingo Prof. Dr.
Referee:
Geishecker, Ingo Prof. Dr.
Referee:
Baskaran, Thushyanthan Dr.
Persistent Address: http://hdl.handle.net/11858/00-1735-0000-0022-5E21-5
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Abstract
English
The three essays of this dissertation look at the effect of offshoring on individual perceived fear of job loss and the role of job loss fears during wage negotiations. The first essay compares different estimation strategies for ordinally scaled response data like, e.g., survey data on individual happiness or job loss fears, in the presence of non-random unobserved heterogeneity. This is done by running Monte Carlo simulations on randomly generated artificial data with predetermined parameters. The main contribution of this essay is an evaluation of finite sample properties of the recently developed conditional logit estimators for ordered response data and their comparison with regard to consistency and efficiency. One main finding is that very simple binary recoding schemes deliver parameter estimates with very low bias and high efficiency. Furthermore, the simple linear fixed effects model provides correct coefficient ratios and leads to the same results as from the non-linear estimators. The second essay assesses the impact of offshoring and other globalisation measures on individual perceptions of job loss fears. The empirical analysis combines industry-level offshoring measures with micro-level data from the German Socio-Economic Panel (SOEP) from 1995 to 2006. This essay is the first that estimates the impact of offshoring on individually perceived job security. Estimation results show that offshoring towards low-wage countries raises job loss fears whilst offshoring towards high-wage countries lowers them. The negative effect of offshoring is most pronounced for high-skilled workers. The third essay analyses the impact of job loss fears and offshoring on wages, both theoretically and empirically. In the theoretical model firms and workers collectively negotiate over wages in a right-to-manage setting. During wage negotiations firms can use the possibility to offshore as a threat to increase workers’ job loss fears. The main contribution of this essay is the explicit description of individual job loss fears in the union members’ utility function within a wage bargaining setting. The Nash solution of the wage bargaining model shows that increasing job loss fears, induced by the threat of potential offshoring, lowers the wage of domestic workers. The results of the empirical analysis match with the theoretical findings.
Keywords: offshoring; outsourcing; job loss fears; job security; happiness; fixed effect ordered logit; Monte Carlo simulation; wage bargaining
