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International outsourcing and trade union (de-)centralisation

Author

Listed:
  • Kjell Erik Lommerud

    (Department of Economics, University of Bergen)

  • Frode Meland

    (Department of Economics, University of Bergen)

  • Odd Rune Straume

    (Department of Economics/NIPE, University of Minho)

Abstract

We study the effects of centralised versus decentralised wage setting in a unionsed duopoly where firms can outsource parts of input production to foreign subcontractors. We show that decentralised (as opposed to centralised) wage setting allows trade unions to capture a larger share of the rents generated by international outsourcing. Consequently, the equilibrium degree of outsourcing is lower under decentralised wage setting, which benefits unions if they are sufficiently employment oriented. We identify situations in which both firms and unions prefer decentralised over centralised wage setting. Thus, international outsourcing opportunities is a potential driver of trade union decentralisation.

Suggested Citation

  • Kjell Erik Lommerud & Frode Meland & Odd Rune Straume, 2019. "International outsourcing and trade union (de-)centralisation," NIPE Working Papers 10/2019, NIPE - Universidade do Minho.
  • Handle: RePEc:nip:nipewp:10/2019
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Outsourcing; trade unions; decentralisation;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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