Domestic Outsourcing, Rent Seeking, and Increasing Inequality

Abstract

This paper argues that an important mechanism linking increasing rents and the rising earnings’ inequality among workers with similar skills is the increase in domestic outsourcing and the growth of networked forms of production. This has multiplied contractual relationships and legal claims to profit and rents that reflect interfirm power relations. Firms with the greatest clout are able to claim the largest share of the rents; the weakest struggle to remain viable.