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Friday, October 28, 2005

Study: Demand for Skills in Canada: The Role of Foreign Outsourcing and Information Communication Technology

1981 to 1996

Foreign outsourcing and high technology both significantly increase the demand for higher skilled, non-production workers in the manufacturing sector, according to a new study.

The study found that both factors played an important role in increasing the demand for skills, whether the demand was measured as the share of the wage bill for non-production workers, or their share of employment.

One of the defining features of the Canadian economy in the last two decades has been an increasing wage gap between more-skilled and less-skilled workers.

During this period, there have been dramatic increases in spending on information and communications technologies, and in purchases of intermediate inputs from foreign sources.

With the reduction of trade barriers and increasing integration of world markets, firms may switch from low-skill intensive producers in Canada to foreign suppliers. Or they may move their low skill intensive production process to low-wage countries, and import back the processed products. Foreign outsourcing may, therefore, lead to a decline in the demand for unskilled labour at home, and increase the relative demand for skilled labour.

Note: Data for this study came from three sources developed at Statistics Canada: the KLEMS productivity database, the Annual Survey of Manufactures and input-output tables.

The research paper Demand for Skills in Canada: The Role of Foreign Outsourcing and Information Communication Technology, no. 35 (11F0027MIE2005035, free) is now available online. From Our products and services page, under Browse our Internet publications choose Free, then National accounts.

More studies on international trade or technology use are available free of charge in the analytical series Update on Economic Analysis (11-623-XIE) on our Web site.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Beiling Yan (613-951-1234), Micro-economic Analysis Division.



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Date Modified: 2005-10-28 Important Notices