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Offshoring and Labor Market Power: Comparing Belgian and Dutch Firms

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  • Sabien Dobbelaere
  • Catherine Fuss
  • Mark Vancauteren

Abstract

We study the relationship between offshoring and labor market imperfections at the firm level in Belgium and the Netherlands. In both countries, wage‐markup pricing stemming from workers' monopoly power is more prevalent than wage‐markdown pricing originating from firms' monopsony power. Offshoring is associated with a higher prevalence and intensity of wage markdowns, driven by an increase in productivity that is only imperfectly passed through into an increase in wages. The lower firm‐level productivity‐wage pass‐through in Belgium, attributed to its more centralized bargaining structure, makes wage markdowns more responsive to offshoring.

Suggested Citation

  • Sabien Dobbelaere & Catherine Fuss & Mark Vancauteren, 2026. "Offshoring and Labor Market Power: Comparing Belgian and Dutch Firms," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 65(1), pages 80-99, January.
    • Handle: RePEc:bla:indres:v:65:y:2026:i:1:p:80-99
    DOI: 10.1111/irel.12394
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