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Article: Scientists at University of Minho target international economics.
- Article from:
- Economics Week
- Article date:
- March 13, 2009
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"We analyze unionized firms' incentives to outsource intermediate goods production to foreign (low-cost) subcontractors. Such outsourcing leads to increased wages for the remaining in-house production," scientists in Braga, Portugal report.
"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," wrote K.E. Lommerud and colleagues, University of Minho.
The researchers concluded: "We further show that ...