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What do unions do (to nonunion workers)?

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  • Ruiz-Verdú, Pablo

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.

Suggested Citation

  • Ruiz-Verdú, Pablo, 2004. "What do unions do (to nonunion workers)?," DEE - Working Papers. Business Economics. WB wb040202, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    • Handle: RePEc:cte:wbrepe:wb040202
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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