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The offshoring threat and wage negotiations: Theory and evidence

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  • Jeon, Yongsik
  • Kwon, Chul-Woo

Abstract

This study examines the existence of the offshoring threat on wage rate using plant-level data. To do so, we construct a simple version of the traditional collective wage-bargaining model to consider the offshoring threat. Based on theoretical predictions of the threat effect, we examine evidence of the offshoring threat using plant-level data from South Korea and the endogenous switching regression model. The estimated results in our empirical study strongly suggest that the offshoring threat may exist.

Suggested Citation

  • Jeon, Yongsik & Kwon, Chul-Woo, 2018. "The offshoring threat and wage negotiations: Theory and evidence," Japan and the World Economy, Elsevier, vol. 45(C), pages 19-29.
    • Handle: RePEc:eee:japwor:v:45:y:2018:i:c:p:19-29
    DOI: 10.1016/j.japwor.2017.12.001
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    2. Endoh, Masahiro, 2021. "Offshoring and working hours adjustments in a within-firm labor market," Journal of the Japanese and International Economies, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    Threat effect; Offshoring; Wage bargaining; Endogenous switching regression;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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