Labor boundaries and skills: the case of lobbyists

What are the determinants of in-house employment versus outsourcing in the service sector? I use detailed data on U.S. lobbying services to answer this question. I argue with a series of correlational exercises that firms tend to outsource lobbying tasks that demand a large amount of general skills, whereas they are more likely to assign firm-specific tasks to in-house lobbyists. I provide causal evidence that the need to do tasks that vary in their general skill component leads to a change in outsourcing. Using difference-in-difference estimations, I show that the 2010 British Petroleum oil spill increased the general skills needed by oil and gas firms and that, consequently, their use of lobbyists for hire increased.