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Product Market Competition and Trade Union Structure

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  • Klaas J. Beniers

    ()
    (Faculty of Economics, Erasmus University Rotterdam)

  • Robert A.J. Dur

    ()
    (Faculty of Economics, Erasmus University Rotterdam)

Abstract

Trade unions tend to reduce the dispersion of wages among their members. Skilled workers may therefore have an incentive to separate from an encompassing union and organize into a separate craft union. In this paper, we examine a theoretical model to gain insight into the determinants of the number of trade unions at a firm. We show that imperfect competition in the product market may drive skilled and unskilled workers together, even though unskilled workers use their political power in the trade union to extract rents from the skilled workers. Additionally, we examine the influence of several features of production technology on trade union structure.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 03-005/1.

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Date of creation: 09 Jan 2003
Date of revision: 26 Aug 2003
Handle: RePEc:dgr:uvatin:20030005

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Web page: http://www.tinbergen.nl

Related research

Keywords: product market competition; trade union structure; wage dispersion;

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  1. Jun, Byoung Heon, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Wiley Blackwell, vol. 56(1), pages 59-76, January.
  2. Richard B. Freeman, 1980. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
  3. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
  4. Agell, J. & Lommerud, K.E., 1990. "Union Egalitarianism As Income Insurance," Papers 1990a, Uppsala - Working Paper Series.
  5. Stewart, Mark B, 1990. "Union Wage Differentials, Product Market Influences and the Division of Rents," Economic Journal, Royal Economic Society, vol. 100(403), pages 1122-37, December.
  6. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-97, June.
  7. Richard B. Freeman, 1982. "Union wage practices and wage dispersion within establishments," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 36(1), pages 3-21, October.
  8. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
  9. Lawrence Mishel, 1986. "The structural determinants of union bargaining power," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 40(1), pages 90-104, October.
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