Can deunionization lead to international outsourcing?

Kjell Lommerud (), Frode Meland () and Odd Rune Straume
Additional contact information
Frode Meland: University of Bergen, Department of Economics, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway, http://www.uib.no/persons/Frode.Meland

No 15/05, Working Papers in Economics from University of Bergen, Department of Economics

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 implies higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this results 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)
Pages: 28 pages
Date: 2005-06-05
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Citations: View citations in EconPapers (6)

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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:hhs:bergec:2005_015

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