The Insider-Outsider Theory of Employment and Unemployment | The MIT PressBy Assar Lindbeck and Dennis J. This book provides an accessible, balanced account of the insider-outsider theory of labor market activity. It focuses on how "insiders" incumbent employees whose jobs are protected by various labor turnover costs get market power, what they do with that power, and how their activities affect the "outsiders" who are either unemployed or work in the informal sector. The book examines the effects of insiders' activities on wages, employment, and unemployment; discusses the associated policy implications; and relates the insider-outsider theory to other theories of labor market activity. The central part of the book consists of a series of previously published articles that have been edited to convey a single coherent account of the insider-outsider theory. Chapters are preceded by overviews summarizing the main ideas and relating them to the book's underlying theme.
Macro: Unit 1.4 -- Unemployment
The Insider-Outsider Theory: A Survey
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated. The insider-outsider theory: a survey. Lindbeck, Assar Snower, Dennis J. This article is an idiosyncratic survey of the insider-outsider theory, describing the vision underlying the theory, and evaluating salient contributions to the literature in the light of this vision. We also indicate what appear to have been dead-ends and red herrings in past research.
Unemployment Clarification Australia (Definitions of Employment and Unemployment)
Insider—outsider theory is often used as a basis for explaining the hysteretic behaviour of unemployment. Despite this, there is no empirical evidence about the validity of this theory on explaining the persistence of unemployment. The results show that although the unemployment rate exhibits a pronounced hysteretic behaviour in OECD countries, this behaviour is reversed once we account for the insider—outsider proxies. Our findings thus validate the role of the insider—outsider theory as a key source of unemployment hysteresis. Most users should sign in with their email address. If you originally registered with a username please use that to sign in. To purchase short term access, please sign in to your Oxford Academic account above.
The insider-outsider theory is a theory of labor economics that explains how firm behavior, national welfare, and wage negotiations are affected by a group in a more privileged position. The insiders, those employed by a firm, and the employers are the bargainers over wages. Because the insiders are already employed, they are in a position of power and are ultimately uninterested in expanding the number of jobs available for those who are not already employed. In other words, they are interested in maximizing their own wages rather than expanding jobs by holding wages down and allowing outsiders to become employed. This cost, called labor turnover cost, includes severance pay, hiring process expenditures, and firm-specific training. The outsiders unemployed become increasingly less relevant in the bargain. The result is a labor market that does not see any wage underbidding despite the willingness of many unemployed workers to work at a lower wage.
Stockholm University. Kiel Institute for the World Economy. Weibull, Lazear, Edward P, Barry McCormick,