From outsourcing to productivity, passing through training: microeconometric evidence from Italy

This paper provides firm-level evidence on the short-run link between outsourcing and productivity using an original dataset of Italian manufacturing firms and estimating a recursive system of three equations. We find a positive correlation between productivity and outsourcing only if firms provide training for the workforce. This indirect impact is significant only in the case of production outsourcing and when training is provided off the job to top and middle managers. The rationale is that production outsourcing induces a re-organization of the production process requiring workers to learn and adapt through formal training activities.