The role of profit sharing in a dual labour market with flexible outsourcing

Arbeitspapier

We analyze the following questions associated with flexible outsourcing under partly imperfect dual domestic labour markets, where high skilled workers participate in firm's profit via profit sharing: How does the implementation of profit sharing influence flexible outsourcing? What is the relationship between outsourcing cost, profit sharing and wages? We show that profit sharing has a positive effect on low skilled wage and thus an outsourcing enhancing character. The wages of both types of labour are negatively correlated and lower outsourcing cost can increase the wage dispersion by decreasing the low skilled wage and raising the high skilled wage. The overall effect of profit sharing on high skilled wage is ambiguous due to a positive direct effect and a negative indirect effect via the low skilled wage.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 3876

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Production
• Subject: Flexible outsourcing ; dual labour market ; profit sharing ; labour market imperfection ; employee effort ; Outsourcing ; Erfolgsbeteiligung ; Dualer Arbeitsmarkt ; Lohnstruktur ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koskela, Erkki ; König, Jan
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/35669
• URN: urn:nbn:de:101:1-20081217131
• Last update: 10.03.2025, 11:44 AM CET