The Insider-Outsider Theory: A Survey

Assar Lindbeck and Dennis J. Snower ()
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Dennis J. Snower: Hertie School of Governance

No 534, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This article is an idiosyncratic survey of the insider-outsider theory, describing the vision underlying the theory, and evaluating salient contributions to the literature in the light of this vision. We also indicate what appear to have been dead-ends and red herrings in past research. The first section deals with the theory, concerning how labor turnover costs influence insider wages and outsiders’ opportunities and how these costs affect employment and unemployment. We also address the more complex, and open, question of how employment and unemployment move through time, in response to labor market shocks. The second section deals with the insider-outsider theory in relation to two important economic institutions: unions and social norms. The third section confronts the relevant empirical evidence. Finally, the last section concludes by clarifying some common misunderstandings and identifying promising areas of future research.

Keywords: employment; unemployment; wages; insiders; outsiders; unemployment persistence; social exclusion; labor turnover costs (search for similar items in EconPapers)
JEL-codes: J23 J24 J31 J32 J38 J41 J42 J51 J63 J64 J68 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2002-07
New Economics Papers: this item is included in nep-hpe, nep-mic and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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