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Wage bargaining, job loss fears and offshoring

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  • Riedl, Maximilian

Abstract

In this paper I present a simple theoretical model where firms and trade unions negotiate over wages. Firms have the possibility to offshore parts of the ir production and trade union members have a disutility from individual job loss fears. I show that higher job loss fears result in lower wages. As a Nash bargaining result, firms can use potential but non realized offshoring as a threat to enforce lower wages. Using a large German household survey, I can show evidence that increasing potential offshoring lowers wages through high job loss fears.

Suggested Citation

  • Riedl, Maximilian, 2013. "Wage bargaining, job loss fears and offshoring," University of Göttingen Working Papers in Economics 174, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:174
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    References listed on IDEAS

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    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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