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An extension of the insider-outsider labor market theory: The inclusion of quasi-insiders

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  • Jin-Ngo, Dylan

Abstract

The rise of high-skilled, temporary workers has reshaped market power dynamics, derived from labor turnover costs, in the primary labor market. We provide a preliminary framework extending the insider-outsider theory of employment and unemployment to account for the role of the “quasi-insider”. Reducing the market power of insiders, firms can exploit productivity-wage arbitrage to pass along labor turnover costs to new employees. We highlight a resulting second-order effect on the reduction of aggregate unemployment.

Suggested Citation

  • Jin-Ngo, Dylan, 2026. "An extension of the insider-outsider labor market theory: The inclusion of quasi-insiders," Economics Letters, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:ecolet:v:260:y:2026:i:c:s0165176525006299
    DOI: 10.1016/j.econlet.2025.112792
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    References listed on IDEAS

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    1. A. Kerem Co?ar & Nezih Guner & James Tybout, 2016. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," American Economic Review, American Economic Association, vol. 106(3), pages 625-663, March.
    2. Alessandro Caiumi & Giovanni Peri, 2024. "Immigration's Effect on US Wages and Employment Redux," NBER Working Papers 32389, National Bureau of Economic Research, Inc.
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