Wage bargaining, job loss fears and offshoring

Maximilian Riedl ()

No 174, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: In this paper I present a simple theoretical model where firms and trade unions negotiate over wages. Firms have the possibility to offshore parts of the ir production and trade union members have a disutility from individual job loss fears. I show that higher job loss fears result in lower wages. As a Nash bargaining result, firms can use potential but non realized offshoring as a threat to enforce lower wages. Using a large German household survey, I can show evidence that increasing potential offshoring lowers wages through high job loss fears.

Keywords: offshoring; wage bargaining; job loss fears (search for similar items in EconPapers)
JEL-codes: F16 J50 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-int and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:174

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