Outsourcing and labor taxation in dual labor markets

Arbeitspapier

We evaluate the effects of international outsourcing and labor taxation on wage formation and equilibrium unemployment in dual labor markets. Outsourcing promotes wage dispersion between the high-skilled and low-skilled workers. Higher domestic low-skilled wage tax, higher payroll tax and lower wage tax exemption increase optimal outsourcing. Outsourcing will reduce equilibrium unemployment of low-skilled workers both in the presence and absence of labor taxation. In the presence of outsourcing, wage tax, tax exemption and payroll tax have an ambiguous effect on equilibrium unemployment. Increasing the degree of tax progression decreases the wage rate and increases the demand of low-skilled workers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2333

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Labor Force and Employment, Size, and Structure ; Wage Level and Structure; Wage Differentials ; Trade Unions: Objectives, Structure, and Effects ; Labor Standards: Labor Force Composition ; Taxation and Subsidies: Incidence
• Subject: Outsourcing ; dual labor markets ; labor taxation ; equilibrium unemployment ; Outsourcing ; Dualer Arbeitsmarkt ; Lohnsteuer ; Arbeitslosigkeit ; Qualifikation ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koskela, Erkki ; Poutvaara, Panu
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/26378
• Last update: 10.03.2025, 11:46 AM CET