Flexible Outsourcing and the Impacts of Labour Taxation in European Welfare States

OPEN ARCHIVE

Union Jack
Dannebrog

Flexible Outsourcing and the Impacts of Labour Taxation in European Welfare States

Show full item record

Title: Flexible Outsourcing and the Impacts of Labour Taxation in European Welfare States
Author: Koskela, Erkki; Poutvaara, Panu
Abstract: In European Welfare States, low-skilled workers are typically unionized, while the wage formation of high-skilled workers is more competitive. To focus on this aspect, we analyze how flexible international outsourcing and labour taxation affect wage formation, employment and welfare in dual domestic labour markets. Higher productivity of outsourcing, lower cost of outsourcing and lower factor price of outsourcing increase wage dispersion between the high-skilled and low-skilled workers. Increasing wage tax progression of low-skilled workers decreases the wage rate and increases the labour demand of low-skilled workers. It decreases the welfare of lowskilled workers and increases both the welfare of high-skilled workers and the profit of firms.
URI: http://hdl.handle.net/10398/7696
Date: 2008-12-08

Creative Commons License This work is licensed under a Creative Commons License.

Files Size Format View
dp 2008-15.pdf 178.8Kb PDF View/Open

This item appears in the following Collection(s)

Show full item record