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Outsourcing Cost and Tax Progression under Nash Wage Bargaining with Flexible Outsourcing

Erkki Koskela

No 5097, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: It is analyzed the impacts of outsourcing cost and wage tax progression under labor market imperfections with Nash wage bargaining and flexible outsourcing. With sufficiently strong (weak) labor market imperfection, lower outsourcing cost has a wage-moderating (wage-increasing) effect so that there is a negative (positive) effect on equilibrium unemployment. Higher tax progression, to keep the relative tax burden per worker constant, has a wage moderating and a positive effect on employment and negative effect on outsourcing.

Keywords: Nash wage bargaining; outsourcing; labor tax reform (search for similar items in EconPapers)
JEL-codes: H22 J41 J51 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2010-07
New Economics Papers: this item is included in nep-acc, nep-bec, nep-lab and nep-pub
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Citations: View citations in EconPapers (1)

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