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The Efficiency of Collective Bargaining in Public Schools

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  • Daniel S. Hosken
  • David N. Margolis

Abstract

This paper develops a bargaining model of wage and employment determination for the public sectror. The solution to the model generates structural wage and employment equations that are estimated using data from New York State teacher-school district collective bargaining agreements. An advantage of this approach is that the major collective bargaining models (monopoly union, right to manage, efficient contracting, and inefficient contracting) are nested in the structural equations based on flexible functional forms and these models can be empirically tested as restrictions on estimated model parameters. The empirical results suggest that the allocation of resources generated by collective bargaining in New York State public schools is, by and large, not Pareto efficient. Furthermore, it is possible to estimate separate measures of union bargaining power over wages and employment. Empirically, it appears that union bargaining power over wages is around 0.53, while bargaining power over employment is around 0.71. In addition, the paper demonstrates the importance of controlling for the nature of the collective agreement when measuring the level of public services that flow to a community in the presence of a unionized public sector work force. Nous proposons un modèle de négociations collectives sur les salaires et l'emploi dans le secteur public. La solution de ce modèle implique des équations structurelles de détermination des salaires et d'emploi qui sont estimées à partir de données provenant des conventions colléctives des écoles publiques de l'état de New York. Notre approche a l'avantage d'englober tous les modèles majeurs de la littérature sur les négociations collectives (syndicat monopole, droit à gérer, négociations efficaces et négociations inefficaces) et de relier chaque modèle à une restriction d'égalité sur un ou plusieurs paramètres estimés. Nos résultats suggèrent que l'allocation des ressources spécifiée dans les conventions collectives des enseignants de l'état de New York n'est, en générale, pas efficace. De plus, notre approche nous permet d'estimer le pouvoir de négociationsur les salaires et sur l'emploi séparément. Nous trouvons un pouvoir de négociation sur les salaires de 0.53, et sur l'emploi de 0.71. Finalement, nous démontrons l'importance de contrôler le caractère endogène des salaires lors de l'analyse des flux des services publics dans un marché syndicalisé.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 96s-10.

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Date of creation: 01 Mar 1996
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Handle: RePEc:cir:cirwor:96s-10

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Keywords: Collective Bargaining; Efficient Contracting; Public Sector Union; Education; Négociations collectives; contrats efficaces; syndicat du secteur public; éducation;

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  1. Eberts, Randall W & Stone, Joe A, 1986. "On the Contract Curve: A Test of Alternative Models of Collective Bargaining," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 66-81, January.
  2. Abowd, John M, 1989. "The Effect of Wage Bargains on the Stock Market Value of the Firm," American Economic Review, American Economic Association, vol. 79(4), pages 774-800, September.
  3. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  4. Megdal, Sharon Bernstein, 1984. "A model of local demand for education," Journal of Urban Economics, Elsevier, vol. 16(1), pages 13-30, July.
  5. Barry T. Hirsch & David A. MacPherson, 1993. "Union membership and coverage files from the Current Population Surveys: Note," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(3), pages 574-578, April.
  6. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March.
  7. Romer, Thomas & Rosenthal, Howard, 1979. "Bureaucrats versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 563-87, November.
  8. Peter Cramton & Joseph S. Tracy, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," Papers of Peter Cramton 92aer, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
  9. Ashenfelter, Orley & Johnson, George E, 1969. "Bargaining Theory, Trade Unions, and Industrial Strike Activity," American Economic Review, American Economic Association, vol. 59(1), pages 35-49, March.
  10. Currie, J., 1990. "Employment Determination In A Unionized Public Sector Labor Market: The Case Of Ontario'S School Teachers," Papers 20, California Los Angeles - Applied Econometrics.
  11. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-78, September.
  12. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June.
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Cited by:
  1. Amigues, J.-P. & Favard, P. & Gaudet, G. & Moreaux, M., 1996. "On The Optimal Order of Natural Resourse Use When the Capacity of the Inexhaustible Substitute is Limited," Papers 96.431, Toulouse - GREMAQ.
  2. Fontagne, Lionel & Daniel Mirza, 2002. "International Trade and Rent Sharing in Developed and Developing countries," Royal Economic Society Annual Conference 2002 77, Royal Economic Society.
  3. Touhami, A. & Martens, A., 1996. "Macroemesures in Computable General Equilibrium Models: a Probabilistic Treatment with an Application to Morocco," Cahiers de recherche 9621, Universite de Montreal, Departement de sciences economiques.
  4. Fontagne, Lionel & Mirza, Daniel, 2007. "International trade and rent sharing among developed and developing countries," Economic Modelling, Elsevier, vol. 24(3), pages 523-558, May.

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