What Do Unions Do (To Nonunion Workers)?

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What Do Unions Do (To Nonunion Workers)?

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Pablo Ruiz Verdú ()

Abstract

This paper develops a model of wage and employment determination under the threat of unionization. The model shows that this threat generally leads nonunion firms to pay higher than competitive wages and to set a level of employment equal to or higher than the competitive employment level. This result holds independently of the model used to represent union-management bargaining, as long as it exhibits an intuitively appealing trade-off between wages and employment (monotonicity). The right-to-manage and the Nash-bargaining models are shown to be monotone, so the result extends to the most commonly used models of unionmanagement bargaining.

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Paper provided by Universidad Carlos III, Departamento de Economía de la Empresa in its series Business Economics Working Papers with number wb040202.

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Date of creation: Jan 2004
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Handle: RePEc:cte:wbrepe:wb040202

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This paper has been announced in the following NEP Reports:

NEP-ALL-2004-03-14 (All new papers)

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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. [Downloadable!] (restricted)
repec:cup:macdyn:v:5:y:2002:i:05:p:742-747_03 is not listed on IDEAS
Rosen, Sherwin, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," Review of Economic Studies, Blackwell Publishing, vol. 36(106), pages 185-96, April. [Downloadable!] (restricted)
repec:cup:cbooks:9780521576475 is not listed on IDEAS
Cahuc, Pierre & Wasmer, Etienne, 2001. "Does Intrafirm Bargaining Matter In The Large Firm'S Matching Model?," Macroeconomic Dynamics, Cambridge University Press, vol. 5(05), pages 742-747, November. [Downloadable!]
Naylor, Robin & Raaum, Oddbjorn, 1993. "The Open Shop Union, Wages, and Management Opposition," Oxford Economic Papers, Oxford University Press, vol. 45(4), pages 589-604, October. [Downloadable!] (restricted)
Booth, Alison L, 1985. "The Free Rider Problem and a Social Custom Model of Trade Union Membership," The Quarterly Journal of Economics, MIT Press, vol. 100(1), pages 253-61, February. [Downloadable!] (restricted)
Stole, Lars A & Zwiebel, Jeffrey, 1996. "Intra-firm Bargaining under Non-binding Contracts," Review of Economic Studies, Blackwell Publishing, vol. 63(3), pages 375-410, July. [Downloadable!] (restricted)

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