--- canonical_url: "https://csls.ca/research/further-evidence-on-the-contribution-of-services-outsourcing-to-the-decline-in-manufacturings-employment-share-in-canada/" title: "Further Evidence on the Contribution of Services Outsourcing to the Decline in Manufacturing’s Employment Share in Canada" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-02T12:49:02+00:00" date_modified: "2026-07-07T08:08:06+00:00" post_type: "research" summary: "" post_tag: - "Canada" - "deindustrialization" - "input-output" - "labour market" - "manufacturing employment" - "occupational decomposition" - "services outsourcing" - "Statistics Canada" country_focus: - "Canada" province_region: - "National" research_theme: - "Labour Markets" - "Sector/Industry Analysis" featured_image: "https://csls.ca/wp-content/uploads/2026/07/old-reports_hero_banner_bg.webp" status: "publish" --- # Further Evidence on the Contribution of Services Outsourcing to the Decline in Manufacturing’s Employment Share in Canada Canonical URL: https://csls.ca/research/further-evidence-on-the-contribution-of-services-outsourcing-to-the-decline-in-manufacturings-employment-share-in-canada/ # Further Evidence on the Contribution of Services Outsourcing to the Decline in Manufacturing’s Employment Share in Canada [Download full PDF report](https://csls.ca/pdf/csls2016-11-1.pdf) Cite this report × Cite this report as: Calver, Matthew, and Evan Capeluck. 2016. “Further Evidence on the Contribution of Services Outsourcing to the Decline in Manufacturing’s Employment Share in Canada.” CSLS Research Report 2016-11. Ottawa: Centre for the Study of Living Standards. https://csls.ca/research/further-evidence-on-the-contribution-of-services-outsourcing-to-the-decline-in-manufacturings-employment-share-in-canada/ ## Authors: - Matthew Calver Centre for the Study of Living Standards (CSLS) - Evan Capeluck Norman Paterson School of International Affairs, Carleton University ## Report 2016-11 July 2016 84 pages ## Related research [Measuring the Appropriate Outcomes for Better Decision-Making: A Framework to Guide the Analysis of Health Policy Matthew Calver March 2016 | Report 2016-03 | 132 pages](https://csls.ca/research/measuring-the-appropriate-outcomes-for-better-decision-making-a-framework-to-guide-the-analysis-of-health-policy-2016-03/) [Living Standards Domain of the Canadian Index of Wellbeing Andrew Sharpe, Christopher Ross November 2011 | Report 2011-17 | 124 pages](https://csls.ca/research/living-standards-domain-of-the-canadian-index-of-wellbeing-2011-17/) [Closing the First Nations Education Gap in Canada: Assessing Progress and Estimating the Economic Benefits — An Update Centre for the Study of Living Standards (CSLS) February 2023 | Report 2023-01 | 101 pages](https://csls.ca/research/closing-the-first-nations-education-gap-in-canada-assessing-progress-and-estimating-the-economic-benefits-an-update-2023-01/) [Productivity: Key to Economic Success Centre for the Study of Living Standards (CSLS) March 1998 | Report 1998-01 | 99 pages](https://csls.ca/research/productivity-key-to-economic-success/) [New Estimates of Manufacturing Productivity Growth for Canada and the United States Andrew Sharpe March 1999 | Report 1999-02 | 21 pages](https://csls.ca/research/new-estimates-of-manufacturing-productivity-growth-for-canada-and-the-united-states/) [Apprenticeship in Canada: A Training System Under Siege? Andrew Sharpe December 1999 | Report 1999-03 | 59 pages](https://csls.ca/research/apprenticeship-in-canadaa-training-system-under-siege/) [A Survey of Indicators of Economic and Social Well-being Andrew Sharpe July 1999 | Report 1999-cprn | 72 pages](https://csls.ca/research/a-survey-of-indicators-of-economic-and-social-well-being/) [A Comparison of Canadian and U.S. Labour Market Performance, 1989-2000 Andrew Sharpe April 2001 | Report 2001-01 | 29 pages](https://csls.ca/research/a-comparison-of-canadian-and-u-s-labour-market-performance-1989-2000/) [Creating a More Efficient Labour Market Centre for the Study of Living Standards (CSLS) June 2001 | Report 2001-02 | 147 pages](https://csls.ca/research/creating-a-more-efficient-labour-market/) [The Impact of the National Child Benefit Supplement on the Low Income Status of Canadian Families with Children: The SPSD/M Results Centre for the Study of Living Standards (CSLS) June 2002 | Report 2002-01 | 59 pages](https://csls.ca/research/the-impact-of-the-national-child-benefit-supplement-on-the-low-income-status-of-canadian-families-with-children-the-spsd-m-results/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn In October 2015, the Centre for the Study of Living Standards released a report examining how outsourcing of work from the manufacturing sector to the services sector contributed to the recorded decline in Canadian manufacturing employment over the past four decades. The evidence was mixed. An examination of the input-output structure of the economy suggested that the effect of services outsourcing was very small while a decomposition of employment growth by industry and occupation suggested that the effect may have been substantial. This report revisits these results using new custom data products provided by Statistics Canada. In particular, the earlier work examined an input-output structure based on current dollar data which may have skewed the results due to large price swings, particularly in the oil and gas sector. This report uses chained dollar estimates to avoid this problem. Similarly, the employment decomposition used highly aggregated occupational data which may have overstated the contribution of outsourcing to manufacturing’s declining employment share. We use more detailed occupational data from the Census / National Household Survey. We find that the results regarding the contribution of services outsourcing are fairly robust to the choice of data. Furthermore, we are able to reconcile the differing estimates of the importance of services outsourcing between the input-output and occupational decomposition methodologies by noting that much of the decline in manufacturing employment in services occupations might be expected to occur if the manufacturing sector shrank for reasons unrelated to services outsourcing. In particular, the expected share of the decline associated with service occupations in response to a negative shock to the manufacturing sector should be roughly equal to the share of service occupations in total manufacturing employment. Adjusting for this, we find that both exercises suggest the contribution of services outsourcing to the decline of manufacturing’s employment share was quite small, explaining no more than 8.3 per cent. En octobre 2015, le Centre d’étude des niveaux de vie a publié un rapport examinant comment l’externalisation du travail du secteur manufacturier vers le secteur des services a contribué au déclin observé de l’emploi manufacturier canadien au cours des quatre dernières décennies. Les résultats étaient mitigés. Un examen de la structure des entrées-sorties de l’économie suggérait que l’effet de l’externalisation des services était très faible, tandis qu’une décomposition de la croissance de l’emploi par industrie et profession suggérait que l’effet pourrait avoir été important. Ce rapport revisite ces résultats à l’aide de nouveaux produits de données personnalisés fournis par Statistique Canada. En particulier, les travaux antérieurs portaient sur une structure des entrées-sorties fondée sur des données en dollars courants, ce qui pourrait avoir faussé les résultats en raison de fortes variations de prix, notamment dans le secteur pétrolier et gazier. Ce rapport utilise des estimations en dollars enchaînés afin d’éviter ce problème. De même, la décomposition de l’emploi utilisait des données professionnelles fortement agrégées, ce qui pourrait avoir surestimé la contribution de l’externalisation au déclin de la part de l’emploi manufacturier. Nous utilisons des données professionnelles plus détaillées tirées du Recensement et de l’Enquête nationale auprès des ménages. Nous constatons que les résultats concernant la contribution de l’externalisation des services sont assez robustes au choix des données. De plus, nous parvenons à réconcilier les estimations divergentes de l’importance de l’externalisation des services entre les méthodologies de décomposition des entrées-sorties et professionnelle, en notant qu’une grande partie du déclin de l’emploi manufacturier dans les professions liées aux services pourrait être attendue si le secteur manufacturier connaissait une évolution similaire. [Download full PDF report](https://csls.ca/pdf/csls2016-11-1.pdf)