Description:
<jats:title>Abstract</jats:title><jats:p>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.</jats:p>