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The offshoring threat and wage negotiations: Theory and evidence

Yongsik Jeon and Chul-Woo Kwon

Japan and the World Economy, 2018, vol. 45, issue C, 19-29

Abstract: This study examines the existence of the offshoring threat on wage rate using plant-level data. To do so, we construct a simple version of the traditional collective wage-bargaining model to consider the offshoring threat. Based on theoretical predictions of the threat effect, we examine evidence of the offshoring threat using plant-level data from South Korea and the endogenous switching regression model. The estimated results in our empirical study strongly suggest that the offshoring threat may exist.

Keywords: Threat effect; Offshoring; Wage bargaining; Endogenous switching regression (search for similar items in EconPapers)
JEL-codes: F16 F23 (search for similar items in EconPapers)
Date: 2018
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