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Can deunionization lead to international outsourcing?

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  • Lommerud, Kjell Erik
  • Meland, Frode
  • Straume, Odd Rune

Abstract

We analyze unionized firms’ incentives to outsource intermediate goods production to foreign (low-cost) subcontractors. Such outsourcing leads to increased wages for the remaining in-house production. We find that stronger unions, which imply higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many countries. We further show that globalization – interpreted as either market integration or increased product market competition – will increase incentives for international outsourcing. -- Im Papier werden die Anreize untersucht, aufgrund derer Unternehmen mit gewerkschaftlich organisierten Beschäftigten die Produktion von Zwischengütern in Niedriglohnländer auslagern. Dieses Outsourcing führt zu höheren Löhnen für die im Inland verbleibende Produktion. Es wird gezeigt, dass starke Gewerkschaften, die für höhere Löhne am inländischen Standort sorgen, die Anreize für die Auslagerung verringern. Dieses theoretische Ergebnis bringt – überraschenderweise – die empirischen Beobachtungen in Übereinstimmung, dass einerseits im Trend die gewerkschaftliche Organisation schwächer wird und andererseits gleichzeitig internationales Outsourcing in vielen Ländern zunimmt. Globalisierung – definiert als Integration von Märkten oder verstärkter Wettbewerb im Produktmarkt – wird die Anreize für internationales Outsourcing weiter verstärken, wie hier gezeigt werden kann.

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Bibliographic Info

Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2006-23.

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Date of creation: 2006
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Handle: RePEc:zbw:wzbmpg:spii200623

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Keywords: International outsourcing; deunionization; globalization;

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References

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