Effect of International Outsourcing on Productivity and Industry Disparity——Based on the Empirical Study of China's Industry Sectors

This paper uses input-output tables to measure material and service outsourcing on industry level and estimate the effects of different forms of outsourcing on labor productivity by panel data model, and at last we test the industry disparity of outsoureing on productivity. The results show that outsourcing is positively associates with productivity in China's industry sectors, and service outsourcing has a more significant positive effect on productivity than that of material outsourcing. The positive effect on productivity in the high-tech industries, low openness, as well as the large-scale industries is larger than that of low-tech, high openness and small-scale industries. The paper makes two original contributions. The first is the distinction of impact made by the material outsourcing and service outsourcing on labor productivity of China's industry sectors. The second is the finding that the nature of industry sectors moderates the effect of international outsourcing on productivity.