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Labour Unions – To Unite or to Separate?

Author

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  • Thorsten Upmann

Abstract

In this paper we investigate trade union formation. To this end we apply a model with two types of labour where the interests of both groups of labourers are represented by either a joint (industry) labour union or by two independent group-specific (professional) labour unions. We investigate whether, and if so, under which conditions, it is beneficial for at least one group of labourers to form its own independent union; or whether it is in the interest of both groups to have a joint industry labour union. Applying the (asymmetric) Nash bargaining solution, we find that under reasonable conditions, it is beneficial for at least one group of labourers to form its own independent labour union. In this case a joint union must be considered as an unstable institution. The profit share, however, is always higher if the firm bargains with a joint labour union. This explains why employers vehemently oppose recent split offs of specialized labour groups from existing industry unions and from tariff unions.

Suggested Citation

  • Thorsten Upmann, 2008. "Labour Unions – To Unite or to Separate?," CESifo Working Paper Series 2413, CESifo.
    • Handle: RePEc:ces:ceswps:_2413
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp2413.pdf
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    References listed on IDEAS

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    1. Thorsten Bayindir‐Upmann & Matthias G. Raith, 2005. "Unemployment and Pollution: Is One Policy Suited for Two Problems?," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 378-393, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    trade-union formation; wage-employment bargains; Nash bargaining solution; industry and professional labour unions; trade union merger;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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