Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2023-02-17
Number: 23-006/V
Author-Name: Sabien Dobbelaere
Author-Workplace-Name: Vrije Universiteit Amsterdam
Author-Name: Catherine Fuss
Author-Workplace-Name: National Bank of Belgium
Author-Name: Mark Vancauteren
Author-Workplace-Name: Universiteit Hasselt
Title: Does offshoring shape labor market imperfections? A comparative analysis of Belgian and Dutch firms
Abstract: We study the relationship between offshoring and the prevalence and intensity
of labor market imperfections at the firm level in Belgium and the Netherlands. Wage markup pricing stemming from workers’ monopoly power is more prevalent than wage markdown pricing originating from firms’ monopsony power in both countries. Offshoring
benefits firms in that imports of final as well as intermediate goods are associated with a
higher prevalence and intensity of wage markdowns. The widening effect of offshoring on
wage markdowns arises from an increase in productivity that is only imperfectly passed
through into an increase in wages. Offshoring is negatively related to the prevalence of
wage markups. This also holds for the intensity of wage markups measured by workers’
bargaining power in Belgium.

Classification-JEL: F14, F16, J42, J50
Keywords: Wage markdowns, wage markups, firm-level offshoring
File-URL: https://papers.tinbergen.nl/23006.pdf
File-Format: application/pdf
File-Size: 734.862 bytes
Handle: RePEc:tin:wpaper:20230006