Abstract

http://ssrn.com/abstract=832984
 
 

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Can Deunionization Lead to International Outsourcing?


Kjell Erik Lommerud


University of Bergen - Department of Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Frode Meland


University of Bergen - Department of Economics

Odd Rune Straume


University of Minho - Economic Policies Research Unit (NIPE); CESifo (Center for Economic Studies and Ifo Institute)

September 2005

CESifo Working Paper Series No. 1545

Abstract:     
We analyze unionized firms' incentives to outsource intermediate goods production to foreign (low-cost) subcontractors. 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 countries. We further show that globalization - interpreted as either market integration or increased product market competition - will increase incentives for international outsourcing.

Number of Pages in PDF File: 33

Keywords: international outsourcing, deunionization, globalization

JEL Classification: F16, J51, L24

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Date posted: October 24, 2005  

Suggested Citation

Lommerud, Kjell Erik and Meland, Frode and Straume, Odd Rune, Can Deunionization Lead to International Outsourcing? (September 2005). CESifo Working Paper Series No. 1545. Available at SSRN: http://ssrn.com/abstract=832984

Contact Information

Kjell Erik Lommerud
University of Bergen - Department of Economics ( email )
Fosswinckelsgt. 6
N-5007 Bergen
Norway
+47 5 558 9209 (Phone)
+47 5 558 9210 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Frode Meland
University of Bergen - Department of Economics ( email )
Fosswinckelsgt. 6
N-5007 Bergen
Norway
+47 5 558 9230 (Phone)
+47 5 558 9210 (Fax)
Odd Rune Straume (Contact Author)
University of Minho - Economic Policies Research Unit (NIPE) ( email )
Campus de Gualtar
Braga, 4710-057
Portugal
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
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