Professor Guochao Yang, a researcher of the base, has published a collaborative paper titled "Why Do Companies Choose Labor Outsourcing: An Explanation Based on Economic Policy Uncertainty" in the China Industrial Economics.

Abstract:

Labor outsourcing is a special form of labor division that allows companies to outsource repetitive,non-core activitiesto third-party labor contractors,thereby focusing their core resources and efforts on core business activities.The fundamental characteristic of labor outsourcing is that it helps enterprises convert long-term employment decisions into short-term employment contracts,which is reflected in increased employment flexibility and reduced labor costs.These two features make labor outsourcing a more effective employment option when dealing with uncertain market conditions.In practice,the increase in labor outsourcing is closely related to economic policy uncertainty.Economic policy uncertainty leads to the inability of firms to form consistentand stable expectations about the future decision-making environment,hence a decline in firms'demand for long-term employment.Therefore,this paper attempts to explain the logic of the abnormal boom in the labor outsourcing market in recent years from the perspective of increased economic policy uncertainty.By manually collecting the labor outsourcing information disclosed in theannual reports of listed companies from 2012 to 2021,this paper finds that economic policy uncertainty makes firms be inclined to opt for labor outsourcing,which is more significant among private firms.Furthermore,this paper uses natural language processing to construct uncertainty indicators at the macro,industry,and enterprise levels,and finds that compared with the uncertaintyof enterprises and the industry,the uncertainty at the macro level is more likely to lead enterprises to choose labor outsourcing.Meanwhile,by distinguishing the business level of labor outsourcing,this paper finds that enterprises tend to outsource low-end rather than high-end business when confronted with economic policy uncertainty.The heterogeneity test shows that economic policy uncertainty is more likely to lead to labor outsourcing in firms with higher adjustment costs,while stable customer relationships in the product market,higher bargaining power,and government's policy support help to reduce the impact of economic policy uncertainty on firms'labor outsourcing.Finally,the paper finds that when economic policy uncertainty is high,labor outsourcing can improve productivity and reduce labor cost rigidity.However,it may crowd out the demand for low-skilled labor and create unequal treatment among outsourced workers.The policy implications of this study are as follows.The government should maintain the stability and consistency of economic policy expectations and protect vulnerable groups by reducing the risk of uncertainty forenterprises.It should also be cautious about the double-edged sword effect of labor outsourcing as a flexible short-term employment method on workers'rights and interests.In addition,the institutional design of labor relations in laws and regulations needsto balance the protection of employers'interests with the rights and interests of vulnerable groups,and strengthen the standardized management of employers and outsourcing firms.The contributions of this paper are as follows.Theoretically,this paper provides an economic explanation for firms to choose labor outsourcing,a hot social phenomenon,from the perspective of real options theory,enriching existing literature on economic policy uncertainty and corporate behavior from the perspective of labor decision-making.In terms of data,unlike previous studies that used estimated data on corporate outsourcing,this paper obtains precisedata by manually collating relevant data from the annual reports of listed companies,providing a rare research opportunity to quantify corporate labor outsourcing behavior directly.

Keywords：labor outsourcing: economic policy uncertainty: emplovment flexibility: labor cost rigidity

Link：https://xkw.zuel.edu.cn/upload/20231103/202311031656048796.pdf

Teacher profile

Guochao Yang, Professor of the school of accounting, Zhongnan University of economics and law, director of the big data center of "income distribution and modern financial discipline innovation and talent introduction base" of the Ministry of education and the Ministry of science and technology, and Wenlan young scholar. The papers have been published in (including to be published) Economic Research (4), management world, China Economic Quarterly (4), world economy, financial research, accounting research (2), China Journal of Accounting Studies (2) and other top-level domestic academic journals. He has won the 2017 China Financial Research Conference (CFRC) best paper award, the first prize of the 12th Hubei social science outstanding achievement award, the first prize of the 16th Wuhan social science outstanding achievement award, the "top ten papers" of the first China empirical research (Finance) paper competition, the special prize of the annual accounting excellent paper of Hubei Accounting Society (twice), and the 2019 national MPAcc excellent teaching cases. He presided over the National Natural Science Foundation of China, the humanities and Social Sciences Foundation of the Ministry of education and a number of projects in Hubei Province.