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Employer Behavior When Workers Can Unionize

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  • Pablo Ruiz Verdú

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    Abstract

    Unionization imposes substantial costs on employers. This paper develops a model that recognizes that, as a result, employers will set wages and employment taking into account the effect of their decisions on workers' incentives to organize. This model of employer behavior allows us to address two questions jointly: What determines which firms become unionized? And what are the consequences of unionization for employment and wages in nonunion firms? The implications of the model depart significantly from those of previous work, which either ignored employers' strategic behavior, or treated these questions in isolation.

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    File URL: http://docubib.uc3m.es/WORKINGPAPERS/WB/wb020803.pdf
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    Bibliographic Info

    Paper provided by Universidad Carlos III, Departamento de Economía de la Empresa in its series Business Economics Working Papers with number wb020803.

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    Date of creation: Mar 2002
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    Handle: RePEc:cte:wbrepe:wb020803

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    1. Richard B. Freeman & Morris M. Kleiner, 1990. "Employer behavior in the face of union organizing drives," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(4), pages 351-365, April.
    2. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, vol. 70(3), pages 355-71, June.
    3. Kennan, J. & Wilson, R., 1991. "Bargaining with Private Information," Working Papers 90-01rev, University of Iowa, Department of Economics.
    4. David G. Blanchflower, 1997. "Changes Over Time in Union Relative Wage Effects in Great Britain and the United States," NBER Working Papers 6100, National Bureau of Economic Research, Inc.
    5. Edward P. Lazear, 1981. "A Competitive Theory of Monopoly Unionism," NBER Working Papers 0672, National Bureau of Economic Research, Inc.
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    7. Stewart, Mark B, 1991. "Union Wage Differentials in the Face of Changes in the Economic and Legal Environment," Economica, London School of Economics and Political Science, vol. 58(230), pages 155-72, May.
    8. Richard B. Freeman, 2000. "Single Peaked Vs. Diversified Capitalism: The Relation Between Economic Institutions and Outcomes," NBER Working Papers 7556, National Bureau of Economic Research, Inc.
    9. Rosen, Sherwin, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," Review of Economic Studies, Wiley Blackwell, vol. 36(106), pages 185-96, April.
    10. Barry T. Hirsch, 1991. "Labor Unions and the Economic Performance of Unions," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number luepf.
    11. Flanagan, Robert J, 1989. "Compliance and Enforcement Decisions under the National Labor Relations Act," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 257-80, July.
    12. Stewart, Mark B, 1995. "Union Wage Differentials in an Era of Declining Unionization," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 143-66, May.
    13. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May.
    14. Andrews, Martyn J & Bell, David N F & Upward, Richard, 1998. "Union Coverage Differentials. Some Estimates for Britain Using the New Earnings Survey Panel Dataset," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(1), pages 47-77, February.
    15. Grossman, Sanford J & Hart, Oliver D & Maskin, Eric S, 1983. "Unemployment with Observable Aggregate Shocks," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 907-28, December.
    16. Barry T. Hirsch & Edward J. Schumacher, 2000. "“Earnings Imputation and Bias in Wage Gap Estimates,”," Working Papers 0003, East Carolina University, Department of Economics.
    17. John M. Abowd & Henry S. Farber, 1990. "Product Market Competition, Union Organizing Activity, and Employer Resistence," NBER Working Papers 3353, National Bureau of Economic Research, Inc.
    18. Richard B. Freeman, 1985. "The Effect of the Union Wage Differential on Management Opposition and Union Organizing Success," NBER Working Papers 1748, National Bureau of Economic Research, Inc.
    19. Azariadis, Costas, 1983. "Employment with Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 157-72, Supplemen.
    20. Linneman, Peter & Wachter, Michael L, 1986. "Rising Union Premiums and the Declining Boundaries among Noncompeting Groups," American Economic Review, American Economic Association, vol. 76(2), pages 103-08, May.
    21. Acemoglu, Daron, 1995. "Asymmetric Information, Bargaining, and Unemployment Fluctuations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(4), pages 1003-24, November.
    22. Ruback, Richard S & Zimmerman, Martin B, 1984. "Unionization and Profitability: Evidence from the Capital Market," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1134-57, December.
    23. Grossman, Sanford J & Hart, Oliver D, 1983. "Implicit Contracts under Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 123-56, Supplemen.
    24. Stole, Lars A & Zwiebel, Jeffrey, 1996. "Intra-firm Bargaining under Non-binding Contracts," Review of Economic Studies, Wiley Blackwell, vol. 63(3), pages 375-410, July.
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