Premium
CONTRACTING OUT, PUBLIC POLICY AND ENTREPRENEURSHIP
Author(s) -
Parker Simon C.
Publication year - 2010
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/j.1467-9485.2010.00510.x
Subject(s) - payroll , incentive , outsourcing , economics , entrepreneurship , microeconomics , public policy , labour economics , public economics , business , finance , marketing , economic growth , accounting
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.