Please use this identifier to cite or link to this item:
Koskela, Erkki
Stenbacka, Rune
Year of Publication: 
Series/Report no.: 
IZA Discussion Papers 2733
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.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
244.75 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.