Equilibrium unemployment with outsourcing and wage solidarity under labour market imperfections

Arbeitspapier

We evaluate the effects of outsourcing and wage solidarity on wage formation and equilibrium unemployment in a heterogeneous labour market, where wages are determined by a monopoly labour union. We find that outsourcing promotes the wage dispersion between the high-skilled and low-skilled workers. When the labour union adopts a solidaristic wage policy, it will magnify, and not dampen, this tendency. Further, higher outsourcing will increase equilibrium unemployment among the high-skilled workers, whereas it will reduce it among the low-skilled workers. Overall, outsourcing will reduce economy-wide equilibrium unemployment under the reasonable condition that the proportion of high-skilled workers is sufficiently low.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 2733

Classification and Topics

• Classification: Wirtschaft
• Subject: Arbeitslosigkeit ; Outsourcing ; Lohnverhandlungen ; Unvollkommener Markt ; Arbeitsmarkttheorie ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koskela, Erkki ; Stenbacka, Rune
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/34275
• URN: urn:nbn:de:101:1-20080402417
• Last update: 10.03.2025, 11:44 AM CET