We evaluate the effects of outsourcing and wage solidarity on wage formation andequilibrium unemployment in a … heterogeneous labour market, where wages are determinedby a monopoly labour union. We find that outsourcing promotes the wage …

We study both the various consequences and the incentives of outsourcing. We argue thatthe wage elasticity of labour … demand is increasing as a function of the share of outsourcing,which is importantly a result consistent with existing …