Advanced Search
MyIDEAS: Login to save this paper or follow this series

Equilibrium Unemployment with Outsourcing under Labour Market Imperfections

Contents:

Author Info

  • Koskela, Erkki

    ()
    (University of Helsinki)

  • Stenbacka, Rune

    ()
    (Swedish School of Economics)

Registered author(s):

    Abstract

    We study both the various consequences and the incentives of outsourcing. We argue that the wage elasticity of labour demand is increasing as a function of the share of outsourcing, which is importantly a result consistent with existing empirical research. Furthermore, we show that a production mode with a higher proportion of outsourcing activity reduces the negotiated wage in the high-wage country with an imperfectly competitive labour market so that outsourcing reduces equilibrium unemployment. Finally, we characterize the optimal production mode and show that stronger labour market imperfections lead to a production mode with a higher share of outsourcing.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://ftp.iza.org/dp2628.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2628.

    as in new window
    Length: 21 pages
    Date of creation: Feb 2007
    Date of revision:
    Publication status: published in: Labour Economics, 2009, 16 (3), 284-290
    Handle: RePEc:iza:izadps:dp2628

    Contact details of provider:
    Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
    Phone: +49 228 3894 223
    Fax: +49 228 3894 180
    Web page: http://www.iza.org

    Order Information:
    Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
    Email:

    Related research

    Keywords: labour market imperfections; equilibrium unemployment; outsourcing;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    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.:
    as in new window
    1. Danthine, Jean-Pierre & Hunt, Jennifer, 1992. "Wage Bargaining Structure, Employment and Economic Integration," CEPR Discussion Papers, C.E.P.R. Discussion Papers 694, C.E.P.R. Discussion Papers.
    2. Kjell Erik Lommerud & Frode Meland & Odd Rune Straume, 2005. "Can Deunionization Lead to International Outsourcing?," CESifo Working Paper Series 1545, CESifo Group Munich.
    3. Jan Rose Skaksen, 2004. "International outsourcing when labour markets are unionized," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 37(1), pages 78-94, February.
    4. Amiti, Mary & Wei, Shang-Jin, 2004. "Fear of Outsourcing: Is It Justified?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4719, C.E.P.R. Discussion Papers.
    5. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 026203316x, December.
    6. Mine Zeynep Senses, 2006. "The Effects of Outsourcing on the Elasticity of Labor Demand," Working Papers, Center for Economic Studies, U.S. Census Bureau 06-07, Center for Economic Studies, U.S. Census Bureau.
    7. Hans-Werner Sinn, 2011. "Introduction," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 12(3), pages 09-17, December.
    8. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
    9. repec:ces:ifofor:v:12:y:2012:i:3:p:09-17 is not listed on IDEAS
    10. Glass, Amy Jocelyn & Saggi, Kamal, 2001. "Innovation and wage effects of international outsourcing," European Economic Review, Elsevier, Elsevier, vol. 45(1), pages 67-86, January.
    11. Skaksen, Mette Yde & Sorensen, Jan Rose, 2001. "Should trade unions appreciate foreign direct investment," Journal of International Economics, Elsevier, Elsevier, vol. 55(2), pages 379-390, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Koskela, Erkki & Stenbacka, Rune, 2007. "Equilibrium Unemployment with Outsourcing and Wage Solidarity Under Labour Market Imperfections," IZA Discussion Papers 2733, Institute for the Study of Labor (IZA).
    2. Erkki Koskela & Rune Stenbacka, 2007. "Equilibrium Unemployment with Outsourcing and Wage Solidarity under Labour Market Imperfections," CESifo Working Paper Series 1988, CESifo Group Munich.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp2628. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.