We analyze the following questions associated with outsourcing and profit sharing under imperfect labour markets. How … does strategic outsourcing influence wage formation, profit sharing and employee effort when firms commit to optimal profit … sharing before wage formation or decide for profit sharing after wage formation? What is the relationship between outsourcing …

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 …