Unions and Employment, Wage, and Hours of Work Dynamics
While it is generally accepted that unions lower employment levels in an industry because of the wage premiums they obtain, there is less agreement on how unions affect an industry's response to changes in output demand. By obtaining a greater percentage of their compensation in fixed fringe benefits that firms may have to pay even after a worker is laid off, unions discourage employment change. Empirical results show that unions are associated with greater changes in work hours and wages for a given change in output. Such results imply that unions, in bargaining, should worry not only about how much their members are compensated but how they are compensated; large fringe benefits may discourage hiring of new workers or rehiring of previously laid-off workers.
Volume (Year): 23 (1997)
Issue (Month): 1 (Winter)
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