Outsourcing And Unionization: From Labor Organizations To Re-organized Work

While many believe unionization has little to gain by recent increases in outsourcing, this question has not been analyzed systematically. In this paper, using a new dataset for US manufacturing from 1973 to 1994, the authors analyze the effect of outsourcing on unionization. Instrumental Variables estimation shows outsourcing contributes to higher quasi-rents and industry employment. They find the union wage premium of substitutable workers is not affected by the extent of outsourcing. However, unionized workers in jobs that are not substitutes of the tasks being outsourced gain from outsourcing. Finally, they find no support for the claim that outsourcing reduces unionization.