CONTRACTING OUT, PUBLIC POLICY AND ENTREPRENEURSHIP

Simon Charles Parker

9 citations0/0 files storedScottish Journal of Political Economy

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Outsourcing and Supply Chain Management Labor Law and Work Dynamics Labor market dynamics and wage inequality

Abstract

Relatively little is known about the impact of public policies on the decisions of firms to contract out parts of their production, despite widespread growth in this practice. The present paper uses a simple principal-agent model to explore the effects of various public policies which affect employers' incentives to outsource by re-grading their employees as independent self-employed contractors. Minimum wages are predicted to increase contracting out, as are payroll and income taxes under several plausible conditions, including worker preferences exhibiting constant relative risk aversion.

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References

1987The Economic Institutions of Capitalism 1976Markets and Hierarchies: Analysis and Antitrust Implications.1986The Economic Institutions of Capitalism 1921Risk, Uncertainty and Profit 1986The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration 2002The Theory of Incentives 2001The Theory of Incentives: The Principal-Agent Model 1979A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion

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