Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30720
Authors: 
Koskela, Erkki
König, Jan
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper 2925
Abstract: 
We combine profit sharing and outsourcing, if the wage for worker is decided by a labor union to analyze how does the implementation of profit sharing affect individual effort and the bargained wage and thus outsourcing? We find that profit sharing and the wage level have an individual effort-augmenting effect and therefore increase productivity. We also find that the wage effect of profit sharing is ambiguous. There is a wage decreasing substitution effect, but on the other hand, there is a wage increasing effect via labor demand elasticity so that outsourcing and employment effects are also ambiguous.
Subjects: 
flexible outsourcing
profit sharing
employee effort
labor market imperfection
JEL: 
E23
E24
J23
J33
J82
Document Type: 
Working Paper

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