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Wage bargaining, job loss fears and offshoring

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  • Riedl, Maximilian

Abstract

In this paper I present a simple theoretical model where firms and trade unions negotiate over wages. Firms have the possibility to offshore parts of the ir production and trade union members have a disutility from individual job loss fears. I show that higher job loss fears result in lower wages. As a Nash bargaining result, firms can use potential but non realized offshoring as a threat to enforce lower wages. Using a large German household survey, I can show evidence that increasing potential offshoring lowers wages through high job loss fears. --

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Paper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 174.

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Date of creation: 2013
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Handle: RePEc:zbw:cegedp:174

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Keywords: offshoring; wage bargaining; job loss fears;

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