The Relational Nature of Employment Dualization: Evidence from Subcontracting Establishments

Fabian Ochsenfeld

No ta4r6, SocArXiv from Center for Open Science

Abstract: Scholars argue that the dual path to labor market flexibility protects the privileges of core workers at the expense of employees relegated to a peripheral employment sector. Yet whether core workers indeed benefit from workforce segmentation remains disputed. To scrutinize this question, I study how the wages of core workers with less than college education respond when their employer shifts employment out to subcontractors, using linked employer-employee panel data from Germany. Empirically, I find the effect of subcontracting on average to be either positive or neutral, but not negative. The presence and strength of the positive effect depends, first, on whether the type of subcontracting affords core workers with codetermination rights, second, on whether core workers are represented by a works council to exercise these rights, and, third, on whether these rights are exercised in a context that augments the bargaining position of core workers by rendering conflictual labor relations costly to the employer.

Date: 2018-05-30
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:ta4r6

DOI: 10.31219/osf.io/ta4r6

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