Equilibrium unemployment with outsourcing under labour market imperfections
By: by Erkki Koskela, Rune Stenbacka.
Contributors: Stenbacka, Rune.
Series: Discussion paper -- no. 2628; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2628
Publisher: IZA
Published: 2007
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Subjects: Unemployment.; Contracting out.
Description: "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"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 4/27/2007.

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