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Can Profit Sharing Lower Flexible Outsourcing? A Note

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  • Koskela, Erkki

    (University of Helsinki)

  • König, Jan

    (Free University of Berlin)

Abstract

We analyze the following question associated with flexible outsourcing under imperfect domestic labour market: How does the implementation of profit sharing influence flexible outsourcing? We show that in general profit sharing has a negative effect on low skilled wage and thus an outsourcing decreasing character. However due to labour union determination of effort a constant effort level will result so that in this case firm's optimal choice of profit sharing is zero.

Suggested Citation

  • Koskela, Erkki & König, Jan, 2009. "Can Profit Sharing Lower Flexible Outsourcing? A Note," IZA Discussion Papers 4063, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4063
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    Cited by:

    1. Koskela, Erkki & König, Jan, 2010. "Profit Sharing, Wage Formation and Flexible Outsourcing under Labor Market Imperfection," IZA Discussion Papers 4707, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    flexible outsourcing; profit sharing; labour market imperfection;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition

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