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Unions: Rent Creators or Extractors?

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  • Toke Skovsgaard Aidt
  • Vania Sena

Abstract

This paper proposes a model of workplace‐specific unions that integrates two views of what unions do. One view holds that unions mainly engage in rent extraction. Another view holds that unions mainly engage in rent creation by providing agency services that increase workplace productivity. We demonstrate that the choice between the two activities is systematically related to the economic and regulatory environment in which the union operates. Product market competition encourages rent creation, while labor market deregulation encourages rent extraction. Moreover, we provide a rationale for why firms may want to subsidize unions.

Suggested Citation

  • Toke Skovsgaard Aidt & Vania Sena, 2005. "Unions: Rent Creators or Extractors?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 103-121, March.
    • Handle: RePEc:bla:scandj:v:107:y:2005:i:1:p:103-121
    DOI: 10.1111/j.1467-9442.2005.00397.x
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    References listed on IDEAS

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    1. David Metcalf, 2002. "Unions and Productivity, Financial Performance and Investment: International Evidence," CEP Discussion Papers dp0539, Centre for Economic Performance, LSE.
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    13. Toke Aidt & Zafiris Tzannatos, 2002. "Unions and Collective Bargaining : Economic Effects in a Global Environment," World Bank Publications - Books, The World Bank Group, number 15241, December.
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    Cited by:

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    3. Andrew T. Young & Hernando Zuleta, 2016. "Golden Rules of Wages," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 253-270, July.
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    5. Filippo Belloc, 2019. "Labor Conflict at the Workplace: Do Dismissal Regulations Matter?," Department of Economics University of Siena 806, Department of Economics, University of Siena.
    6. Uwe Jirjahn, 2009. "The Introduction of Works Councils in German Establishments — Rent Seeking or Rent Protection?," British Journal of Industrial Relations, London School of Economics, vol. 47(3), pages 521-545, September.
    7. Emanuele Bacchiega & Antonio Minniti, 2015. "Training and Product Quality in Unionized Oligopolies," Economica, London School of Economics and Political Science, vol. 82, pages 1261-1301, December.
    8. William Brown & Paul Ryan, 2003. "The Irrelevance of Trade Union Recognition? A Comparison of Two Matched Companies," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(3), pages 383-408, September.
    9. Fathi Fakhfakh & Virginie Pérotin & Andrew Robinson, 2011. "Workplace Change and Productivity: Does Employee Voice Make a Difference?," Chapters, in: Susan Hayter (ed.), The Role of Collective Bargaining in the Global Economy, chapter 5, Edward Elgar Publishing.
    10. Lewkowicz Jacek & Lewczuk Anna, 2017. "An Institutional Approach to Trade Union Density. The Case of Legal Origins and Political Ideology," Central European Economic Journal, Sciendo, vol. 2(49), pages 35-49, December.
    11. Ian Gregory‐Smith, 2021. "Wages And Labor Productivity: Evidence From Injuries In The National Football League," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 829-847, April.
    12. Suphachol Suphachalasai, 2005. "Bureaucratic Corruption and Mass Media," Public Economics 0502014, University Library of Munich, Germany.
    13. Aidt, T.S. & Tzannatos, Z., 2005. "The Cost and Benefits of Collective Bargaining," Cambridge Working Papers in Economics 0541, Faculty of Economics, University of Cambridge.
    14. repec:wvu:wpaper:11-06 is not listed on IDEAS
    15. Antonio Abatemarco, 2021. "J. Rosenfeld: You’re paid what you’re worth—and other myths of the modern economy," Journal of Economics, Springer, vol. 133(2), pages 191-194, July.
    16. Zafiris TZANNATOS & Toke S. AIDT, 2006. "Unions and microeconomic performance: A look at what matters for economists (and employers)," International Labour Review, International Labour Organization, vol. 145(4), pages 257-278, December.
    17. Andrew T. Young & Hernando Zuleta, 2018. "Do Unions Increase Labor Shares? Evidence from US Industry-Level Data," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(4), pages 558-575, September.

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