%0 Report
        %A Koskela, Erkki
%A Stenbacka, Rune
        %T Equilibrium Unemployment with Outsourcing and Wage Solidarity Under Labour Market Imperfections
        %D 2007
        %8 2007 Apr
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 2733
        %U https://www.iza.org/index.php/publications/dp2733
        %X We evaluate the effects of outsourcing and wage solidarity on wage formation and equilibrium unemployment in a heterogeneous labour market, where wages are determined by a monopoly labour union. We find that outsourcing promotes the wage dispersion between the high-skilled and low-skilled workers. When the labour union adopts a solidaristic wage policy, it will magnify, and not dampen, this tendency. Further, higher outsourcing will increase equilibrium unemployment among the high-skilled workers, whereas it will reduce it among the low-skilled workers. Overall, outsourcing will reduce economy-wide equilibrium unemployment under the reasonable condition that the proportion of high-skilled workers is sufficiently low.
        %K outsourcing
%K wage solidarity
%K labour market imperfections
%K equilibrium unemployment