Jens Schmidt-Ehmcke
The aim of this paper is to assess the influence of firms service outsourcing decisions on their performance. I evaluate whether those firms experience significant productivity gains that decide to rearrange their production process by subcontracting in-house activities to outside suppliers. The analysis is based on a representative panel dataset of German manufacturing firms. I estimate separate production functions for firms that outsource parts of their services and those who do not with the help of a matched sample while taking care of endogeneity problems using an estimation approach suggested by Levinsohn and Petrin (2003).
JEL-Classification: L22;L23;C13
Keywords: Total Factor Productivity, Outsourcing, Matching, Census Data
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