@TechReport{iza:izadps:dp2628,
            	author={Koskela, Erkki and Stenbacka, Rune},
            	title={Equilibrium Unemployment with Outsourcing under Labour Market Imperfections},
            	year={2007},
	month={Feb},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={2628},
            	url={https://www.iza.org/publications/dp2628},
	abstract={We study both the various consequences and the incentives of outsourcing. We argue that the wage elasticity of labour demand is increasing as a function of the share of outsourcing, which is importantly a result consistent with existing empirical research. Furthermore, we show that a production mode with a higher proportion of outsourcing activity reduces the negotiated wage in the high-wage country with an imperfectly competitive labour market so that outsourcing reduces equilibrium unemployment. Finally, we characterize the optimal production mode and show that stronger labour market imperfections lead to a production mode with a higher share of outsourcing.},
	keywords={labour market imperfections;equilibrium unemployment;outsourcing},
            }