Can Profit Sharing Lower Flexible Outsourcing? A Note

Erkki Koskela and Jan König ()
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Jan König: Free University of Berlin

No 4063, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze the following question associated with flexible outsourcing under imperfect domestic labour market: How does the implementation of profit sharing influence flexible outsourcing? We show that in general profit sharing has a negative effect on low skilled wage and thus an outsourcing decreasing character. However due to labour union determination of effort a constant effort level will result so that in this case firm's optimal choice of profit sharing is zero.

Keywords: flexible outsourcing; profit sharing; labour market imperfection (search for similar items in EconPapers)
JEL-codes: E24 J23 J33 J51 J82 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2009-03
New Economics Papers: this item is included in nep-bec and nep-lab
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Citations: View citations in EconPapers (2)

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Working Paper: Can Profit Sharing Lower Flexible Outsourcing? A Note (2009)
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