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A Model of Endogenous Union Density and Membership

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  • Habib Ahmed

    (Islamic Development Bank)

  • Stephen M. Miller

    (University of Connecticut)

Abstract

We develop a theoretical model of endogenously determined union density and union membership. A union is formed, continued, or dissolved by majority voting. Given the profitability, production technology, and labor and product market conditions, the union determines the reservation wage that is acceptable to the firm. Based on this reservation wage and other subjective factors, workers vote for or against the union. If the union is formed, the firm determines the employment level at the union wage.

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File URL: http://web2.uconn.edu/economics/working/1999-01.pdf
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Bibliographic Info

Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 1999-01.

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Length: 22 pages
Date of creation: Jul 1999
Date of revision:
Handle: RePEc:uct:uconnp:1999-01

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Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
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Keywords: unions; bargaining; median voter;

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References

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  1. Booth, Alison L & Chatterji, Monojit, 1994. "Union Membership and Wage Bargaining When Membership is Not Compulsory," CEPR Discussion Papers 884, C.E.P.R. Discussion Papers.
  2. Calvo, Guillermo A, 1978. "Urban Employment and Wage Determination in LDC's: Trade Unions in the Harris-Todaro Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(1), pages 65-81, February.
  3. Grossman, Gene M, 1983. "Union Wages, Temporary Layoffs, and Seniority," American Economic Review, American Economic Association, vol. 73(3), pages 277-90, June.
  4. Sampson, Anthony A, 1983. "Employment Policy in a Model with a Rational Trade Union," Economic Journal, Royal Economic Society, vol. 93(37), pages 297-311, June.
  5. Johnston, J, 1972. "A Model of Wage Determination under Bilateral Monopoly," Economic Journal, Royal Economic Society, vol. 82(327), pages 837-52, September.
  6. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  7. Oliver Hart, 1986. "Bargaining and Strikes," Working papers 423, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Freeman, Richard B, 1988. "Contraction and Expansion: The Divergence of Private Sector and Public Sector Unionism in the United States," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 63-88, Spring.
  9. Johnson, George E, 1975. "Economic Analysis of Trade Unionism," American Economic Review, American Economic Association, vol. 65(2), pages 23-28, May.
  10. Hieser, R O, 1970. "Wage Determination with Bilateral Monopoly in the Labour Market: A Theoretical Treatment," The Economic Record, The Economic Society of Australia, vol. 46(113), pages 55-72, March.
  11. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September.
  12. Dreze, Jacques H. & Modigliani, Franco, 1981. "The trade-off between real wages and employment in an open economy (Belgium)," European Economic Review, Elsevier, vol. 15(1), pages 1-40.
  13. Pencavel, John H, 1984. "The Tradeoff between Wages and Employment in Trade Union Objectives," The Quarterly Journal of Economics, MIT Press, vol. 99(2), pages 215-31, May.
  14. Farber, Henry S, 1978. "Individual Preferences and Union Wage Determination: The Case of the United Mine Workers," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 923-42, October.
  15. Lazear, Edward P, 1988. "Symposium on Public and Private Unionization," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 59-62, Spring.
  16. Reder, Melvin W, 1988. "The Rise and Fall of Unions: The Public Sector and the Private," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 89-110, Spring.
  17. Rosen, Sherwin, 1970. "Unionism and the Occupational Wage Structure in the United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(2), pages 269-86, June.
  18. Hayes, Beth, 1984. "Unions and Strikes with Asymmetric Information," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 57-83, January.
  19. Akerlof, George A, 1969. "Relative Wages and the Rate of Inflation," The Quarterly Journal of Economics, MIT Press, vol. 83(3), pages 353-74, August.
  20. Blair, Douglas H & Crawford, David L, 1984. "Labor Union Objectives and Collective Bargaining," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 547-66, August.
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