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Union Membership and Employment Dynamics: A Note

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  • Marcus Dittrich
  • Beate Schirwitz

Abstract

We analyze union behavior in a model with membership dynamics and compare the labor market outcomes to static union models. Based on empirical findings we modify standard models and show that the well-known result that static models overstate distortions caused by unions only holds in the special case of firm-level wage setting. If, however, the union is big enough to determine employment for the whole sector, it rather depends on both the elasticity of labor demand and union’s time preference whether static frameworks overrate or even underrate unions’ distortions.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2010/wp-cesifo-2010-09/cesifo1_wp3173.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3173.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3173

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Related research

Keywords: unions; endogenous membership; bargaining centralization;

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  1. Kidd, David P & Oswald, Andrew J, 1987. "A Dynamic Model of Trade Union Behaviour," Economica, London School of Economics and Political Science, vol. 54(215), pages 355-65, August.
  2. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  3. Carruth, Alan A & Disney, Richard F, 1988. "Where Have Two Million Trade Union Members Gone?," Economica, London School of Economics and Political Science, vol. 55(217), pages 1-19, February.
  4. Chang, Juin-jen & Lai, Ching-chong, 1997. "Union membership and employment dynamics with endogenous union density," Economics Letters, Elsevier, vol. 57(1), pages 119-125, November.
  5. Marcus Dittrich, 2008. "Union wage setting in a dual labour market: the role of centralisation," International Economic Journal, Taylor & Francis Journals, vol. 22(4), pages 461-470.
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Cited by:
  1. Elsayyad, May & Konrad, Kai A., 2012. "Fighting multiple tax havens," Journal of International Economics, Elsevier, vol. 86(2), pages 295-305.

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