TY  - RPRT
        AU  - Koskela, Erkki
AU  - Stenbacka, Rune
        TI  - Equilibrium Unemployment with Outsourcing and Wage Solidarity Under Labour Market Imperfections
        PY  - 2007/Apr/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 2733
        UR  - https://www.iza.org/index.php/publications/dp2733
        AB  - 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.
        KW  - outsourcing
KW  - wage solidarity
KW  - labour market imperfections
KW  - equilibrium unemployment
        ER  -