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Outsourcing Cost and Tax Progression under Nash Wage Bargaining with Flexible Outsourcing

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  • Koskela, Erkki

    ()
    (University of Helsinki)

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    Abstract

    It is analyzed the impacts of outsourcing cost and wage tax progression under labor market imperfections with Nash wage bargaining and flexible outsourcing. With sufficiently strong (weak) labor market imperfection, lower outsourcing cost has a wage-moderating (wage-increasing) effect so that there is a negative (positive) effect on equilibrium unemployment. Higher tax progression, to keep the relative tax burden per worker constant, has a wage moderating and a positive effect on employment and negative effect on outsourcing.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5097.

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    Length: 14 pages
    Date of creation: Jul 2010
    Date of revision:
    Handle: RePEc:iza:izadps:dp5097

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    Related research

    Keywords: Nash wage bargaining; outsourcing; labor tax reform;

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