Can deunionization lead to international outsourcing?

Kjell Erik Lommerud (), Frode Meland and Odd Rune Straume ()

Journal of International Economics, 2009, vol. 77, issue 1, pages 109-119

Abstract: We analyze unionized firms' incentives to outsource intermediate goods production to foreign (low-cost) subcontractors. Such outsourcing leads to increased wages for the remaining in-house production. We find that stronger unions, which imply higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many countries. We further show that globalization - interpreted as either market integration or increased product market competition - will increase incentives for international outsourcing.

Keywords: International; outsourcing; Deunionization; Globalization (search for similar items in EconPapers)
Date: 2009
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Related works:
Working Paper: Can Deunionization Lead to International Outsourcing? (2008)
Working Paper: Can Deunionization Lead to International Outsourcing? (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:inecon:v:77:y:2009:i:1:p:109-119

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