OUTSOURCING AND UNIONIZATION: A TALE OF MISALLOCATED (RESISTANCE) RESOURCES

Elisabetta Magnani and David Prentice

Economic Inquiry, 2010, vol. 48, issue 2, 460-482

Abstract: While many believe the growth in outsourcing contributed to the decline in U.S. unionization up to the 1990s, this argument has never been investigated systematically. In this article, we analyze the effect of outsourcing on unionization between 1973 and 1993. Instrumental variables estimation shows outsourcing contributes to higher quasirents and industry productivity. We find the union wage premium increases with the extent of outsourcing—both for workers that are substitutable by outsourcing services and workers in jobs that are not substitutes of the tasks being outsourced. Finally, we find no support for the claim that outsourcing reduces unionization. (JEL J5, L2, L6)

Date: 2010
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https://doi.org/10.1111/j.1465-7295.2009.00223.x

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Working Paper: Outsourcing and Unionisation: A tale of misallocated (resistance) resources (2006)
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