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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/26378
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| Title: | | Outsourcing and labor taxation in dual labor markets  |
| Authors: | | Koskela, Erkki Poutvaara, Panu |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2333 |
| Abstract: | | 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. |
| Subjects: | | Outsourcing dual labor markets labor taxation equilibrium unemployment |
| JEL: | | E24 J21 J31 J51 J82 H22 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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