Equilibrium Unemployment with Outsourcing and Wage Solidarity under Labour Market Imperfections
Erkki Koskela and
Rune Stenbacka
No 1988, CESifo Working Paper Series from CESifo
Abstract:
We evaluate the effects of outsourcing and wage solidarity on wage formation and equilibrium unemployment in a heterogeneous labour market, where wages are determined by a monopoly labour union. We find that outsourcing promotes the wage dispersion between the high-skilled and low-skilled workers. When the labour union adopts a solidaristic wage policy, it will magnify, and not dampen, this tendency. Further, higher outsourcing will increase equilibrium unemployment among the high-skilled workers, whereas it will reduce it among the low-skilled workers. Overall, outsourcing will reduce economy-wide equilibrium unemployment under the reasonable condition that the proportion of high-skilled workers is sufficiently low.
Keywords: outsourcing; wage solidarity; labour market imperfections; equilibrium unemployment (search for similar items in EconPapers)
JEL-codes: E23 E24 J31 J51 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)
Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp1988.pdf (application/pdf)
Related works:
Journal Article: Equilibrium unemployment with outsourcing and wage solidarity under labour market imperfections (2010) 
Working Paper: Equilibrium Unemployment with Outsourcing and Wage Solidarity Under Labour Market Imperfections (2007) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1988
Access Statistics for this paper
More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().