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Labor Market Pooling, Outsourcing and Labor Contracts

  • Pierre M. Picard
  • David E. Wildasin

Economic regions, such as urban agglomerations, face external demand and price shocks that produce income risk. Workers in large and diversified agglomerations may benefit from reduced wage volatility, while firms may outsource the production of intermediate goods and realize benefits from Chamberlinian externalities. Firms may also protect workers from wage risks through fixed wage contracts. This paper explores the relationships between firms’ risks, workers’ contracts, and the structure of production in cities.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2765.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2765
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