Avoiding the employment relationship: Outsourcing and labour substitution among French manufacturing firms, 1984–2003

Using a comprehensive data set for French manufacturing firms with over 20 employees, the authors quantify the use of outsourcing and show how it has spread since the mid-1980s, leading to the substitution of external labour for in-house labour. Empirical analysis suggests that firms outsource in order to bypass the effects of the employment relationship and circumvent their labour law obligations.