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 …

We study the various consequences of and the incentives for outsourcing. We argue that the wage elasticity of labour …. 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 …