The traditional approach to modeling the effects of trade union power on wages and employment has paid very little attention to how the form of union power affects the outcome. In this paper, wage and employment determination is considered in a dynamic model where some workers, e.g. non-union members, continue to work in the event of a dispute to see whether this practice can be justified. The predictions of the model are very different from the standard one, for example both wages and employment may be a non-monotonic function of union density. The model can also explain situations in which unions are sustainable in the long run. Copyright 1993 by The editors of the Scandinavian Journal of Economics.
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