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Unions: Rent Creators or Extractors?

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  • Toke Skovsgaard Aidt
  • Vania Sena

Abstract

This paper proposes a model of workplace-specific unions that integrates two views of what unions do. One view holds that unions mainly engage in rent extraction. Another view holds that unions mainly engage in rent creation by providing agency services that increase workplace productivity. We demonstrate that the choice between the two activities is systematically related to the economic and regulatory environment in which the union operates. Product market competition encourages rent creation, while labor market deregulation encourages rent extraction. Moreover, we provide a rationale for why firms may want to subsidize unions. Copyright The editors of the "Scandinavian Journal of Economics", 2005 .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.

Volume (Year): 107 (2005)
Issue (Month): 1 (03)
Pages: 103-121

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Handle: RePEc:bla:scandj:v:107:y:2005:i:1:p:103-121

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. Brown, W. & Ryan, P., 2003. "The Irrelevance of Trade Union Recognition? A Comparison of Two Matched Companies," Cambridge Working Papers in Economics 0323, Faculty of Economics, University of Cambridge.
  2. Catia Montagna & Antonella Nocco, . "Unionisation, International Integration and Selection," Discussion Papers 12/07, University of Nottingham, GEP.
  3. Aidt, T.S. & Tzannatos, Z., 2005. "The Cost and Benefits of Collective Bargaining," Cambridge Working Papers in Economics 0541, Faculty of Economics, University of Cambridge.
  4. Suphachol Suphachalasai, 2005. "Bureaucratic Corruption and Mass Media," Environmental Economy and Policy Research Working Papers 05.2005, University of Cambridge, Department of Land Economics, revised 2005.
  5. Vesa Kanniainen & Mikko Leppämäki, 2009. "Union power, entrepreneurial risk, and entrepreneurship," Small Business Economics, Springer, vol. 33(3), pages 293-302, October.
  6. E. Bacchiega & A. Minniti, 2013. "Training and Product Quality in Unionized Oligopolies," Working Papers wp871, Dipartimento Scienze Economiche, Universita' di Bologna.

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