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Can Profit Sharing Lower Flexible Outsourcing? A Note

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Author Info
Erkki Koskela ()
Jan König ()
Abstract

We analyze the following question associated with flexible outsourcing under imperfect domestic labour market: How does the implementation of profit sharing influence flexible outsourcing? We show that in general profit sharing has a negative effect on low skilled wage and thus an outsourcing decreasing character. However due to labour union determination of effort a constant effort level will result so that in this case firm’s optimal choice of profit sharing is zero.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2606.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2606

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Related research
Keywords: flexible outsourcing; profit sharing; labour market imperfection;

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Sandra E. Black & Lisa M. Lynch, 2000. "What's Driving the New Economy: The Benefits of Workplace Innovation," NBER Working Papers 7479, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Sampson, Anthony A., 1993. "Bargaining over effort and the monitoring role of unions," European Journal of Political Economy, Elsevier, vol. 9(3), pages 371-381, August. [Downloadable!] (restricted)
  3. Douglas L. Kruse, 1993. "Does Profit Sharing Affect Productivity?," NBER Working Papers 4542, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  5. Carsten Eckel & Hartmut Egger, 2006. "Wage Bargaining and Multinational Firms in General Equilibrium," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  6. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March. [Downloadable!] (restricted)
  7. Kjell Erik Lommerud & Odd Rune Straume & Lars Sorgard, 2006. "National Versus International Mergers in Unionized Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 37(1), pages 212-233, Spring.
    Other versions:
  8. Martin J. Conyon & Richard B. Freeman, 2001. "Shared Modes of Compensation and Firm Performance: UK Evidence," NBER Working Papers 8448, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Bulkley, George & Myles, Gareth D., 1997. "Bargaining over effort," European Journal of Political Economy, Elsevier, vol. 13(2), pages 375-384, May. [Downloadable!] (restricted)
  10. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June. [Downloadable!] (restricted)
  11. Simon P. Anderson & Michael Devereux, 1989. "Profit-Sharing and Optimal Labour Contracts," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 425-33, May. [Downloadable!] (restricted)
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