Can Deunionization Lead to International Outsourcing?

Kjell Lommerud (), Frode Meland and Odd Rune Straume

No 1545, CESifo Working Paper Series from CESifo

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)
JEL-codes: F16 J51 L24 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-bec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Can deunionization lead to international outsourcing? (2009)
Working Paper: Can Deunionization Lead to International Outsourcing? (2008)
Working Paper: Can deunionization lead to international outsourcing? (2006)
Working Paper: Can deunionization lead to international outsourcing? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1545

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