@TechReport{iza:izadps:dp2733,
            	author={Koskela, Erkki and Stenbacka, Rune},
            	title={Equilibrium Unemployment with Outsourcing and Wage Solidarity Under Labour Market Imperfections},
            	year={2007},
	month={Apr},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={2733},
            	url={https://www.iza.org/publications/dp2733},
	abstract={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.},
	keywords={outsourcing;wage solidarity;labour market imperfections;equilibrium unemployment},
            }