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Inter-firm dependency and employment inequalities : Theoretical hypotheses and empirical tests

This article highlights the importance of power relations in inter-firm relations and analyses their impact on firms' employment management practices. We show, firstly, that the use of subcontracting creates a chain of inter-firm economic dependency because it leads the principal contractor to plan and control the activities of the subcontractors. We then advance the hypothesis that this chain of dependency influences both the skill structure and wage levels. Empirical tests carried out on French data confirm that firms that subcontract outsource execution tasks and that the hierarchy of firms impacts employees' wage levels.

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File URL: ftp://mse.univ-paris1.fr/pub/mse/CES2009/09019.pdf
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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 09019.

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Length: 31 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:mse:cesdoc:09019
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