Why Do Workers Join Unions? The Importance of Rent Seeking
Union status models ignore the fact that rent-seeking prospective members have an incentive to bid up entry costs so that higher union wage gains make union jobs more costly to obtain. The standard presumption that higher union wages cause firms to substitute toward higher quality workers is shown to be incorrect under most plausible assumptions; the observed positive correlation between wage gains and the propensity to join a union underestimates the size of the true supply response. The union/nonunion wage differential reveals more about the social cost of unions than the gains to an individual worker from union membership. Copyright 1989 by Oxford University Press.
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Volume (Year): 27 (1989)
Issue (Month): 2 (April)
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