Koskela, Erkki; Stenbacka, Rune - In: European Economic Review 54 (2010) 3, pp. 376-392
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- and low-skilled workers. When...