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Deunionization, Technical Change and Inequality

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Author Info
Acemoglu, Daron
Aghion, Philippe
Violante, Giovanni L

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Abstract

We argue that inequality and rapid deunionization are related, and that skill-biased technical change has been an important factor in deunionization as well as in the rise in inequality. Skill-biased technical change causes deunionization because it increases the outside option of skilled workers, undermining the coalition among skilled and unskilled worker in support of unions. Our approach implies that although deunionization is not the underlying cause of the increase in inequality, it amplifies the direct effect of skill-biased technical change by removing the wage compression imposed by unions. We also show that deunionization may happen inefficiently.

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Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2764.

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Date of creation: Apr 2001
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Handle: RePEc:cpr:ceprdp:2764

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Related research
Keywords: Deunionization; Efficiency-Enhancing Unions; Rent-Seeking Unions; Skill-Biased Technical Change; Wage Inequality;

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Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General

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