The Discussion Papers series presents results from ongoing research projects and other research and analysis by SSB staff, intended for international journals or books. The views and conclusions in this document are those of the author(s).
This paper provides evidence on the impact of outsourcing on workers' earnings and possible reasons that firms outsource by estimating panel data and event study models using Norwegian administrative data. Workers who become outsourced experience large earnings declines, which are driven by reductions in working hours. Firms are likely to outsource to reduce costs and reduce rigidity in contractual working hours, which is possible as contractor firms operate on lower non-wage costs and have more workers with less than full-time contractual working hours.