Outsourcing and unionization

A tale of misallocated (Resistance) resources

Elisabetta Magnani*, David Prentice

*Corresponding author for this work

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

While many believe the growth in outsourcing contributed to the decline in U.S. unionization up to the 1990s, this argument has never been investigated systematically. In this article, we analyze the effect of outsourcing on unionization between 1973 and 1993. Instrumental variables estimation shows outsourcing contributes to higher quasirents and industry productivity. We find the union wage premium increases with the extent of outsourcing-both for workers that are substitutable by outsourcing services and workers in jobs that are not substitutes of the tasks being outsourced. Finally, we find no support for the claim that outsourcing reduces unionization.

Original languageEnglish
Pages (from-to)460-482
Number of pages23
JournalEconomic Inquiry
Volume48
Issue number2
DOIs
Publication statusPublished - Apr 2010
Externally publishedYes

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