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

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Abstract

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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  • Corinne Perraudin & Héloïse Petit & Nadine Thèvenot & Bruno Tinel & Julie Valentin, 2009. "Inter-firm dependency and employment inequalities: Theoretical hypotheses and empirical tests," Documents de travail du Centre d'Economie de la Sorbonne 09019, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:09019
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    More about this item

    Keywords

    Subcontracting; skills; wages; power relation;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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