The Outsourcing Wage Gap: Exploring the Interplay of Gender and Tasks Along the Job Distribution

Abstract

This paper examines the wage penalty of outsourced workers in France, providing novel insights to the existing literature. First, it investigates the extent to which the wage penalty differs between outsourced male and female workers. Our results reveal that outsourced workers experience pronounced wage penalty, with this effect being stronger for women. Second, in contrast to most studies, we analyse outsourcing across the entire job distribution. We find that the wage penalty is significantly higher for outsourced workers employed in jobs at the lower end of the wage distribution compared to those employed at the top. Third, we assess whether the wage penalty experienced by outsourced workers can be attributed to the tasks they perform, such as repetitiveness, forms of control, and managerial duties. The results show that the tasks performed, while can alter the wage penalty, do not significantly reshape the main results. Thus, differences in tasks do not appear to be a determining factor in the wage penalty of outsourced workers. Longitudinal analysis strengthens the validity of the cross-sectional findings, highlighting that the wage penalty associated with outsourcing does not result from shifts in individual employee characteristics but rather from disparities in their job status and other time-invariant attributes. In summary, being an outsourced worker implies a degradation in wage treatment, which is exacerbated by gender. Given the increasing importance of this employment practice, it underscores the urgent need for policy interventions to address these critical issues.