Koskela, Erkki; Stenbacka, Rune - Institute for the Study of Labor (IZA) - 2007
We evaluate the effects of outsourcing and wage solidarity on wage formation and equilibrium unemployment in a … magnify, and not dampen, this tendency. Further, higher outsourcing will increase equilibrium unemployment among the high … heterogeneous labour market, where wages are determined by a monopoly labour union. We find that outsourcing promotes the wage …