the public concern can be addressed that international fragmentation and outsourcing to low wage countries lead to … outsourcing and critically assess the role of political intervention that aims to reduce unemployment benefits under …

. Such outsourcing leads to increased wages for the remaining inhouse production. We find that stronger unions, which imply … higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a … theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many …