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Union Wage Differentials, Product Market Influences And The Division Of Rents

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  • Stewart, Mark B.

Abstract

This paper examines the circumstances which enable trade unions to establish wage differentials. Union wage differentials are created by the capturing of rents and the paper considers the circumstances in which rents exist to be captured and when unions are able to do so. In line with theoretical predictions, differentials are found to be very different in establishments facing competitive product market conditions and in those with some degree of product market power. In the former, high union coverage of the industry and the union strength given by a pre-entry closed shop are found to be dominant requirements, with only a very small minority of establishments satisfying even these. In contrast there is found to be considerably greater scope for unions in firms with market power and neither of the above conditions are a requirement for the existence of a differential in this case. Unions are found to be unable to create differentials in establishments which operate primarily in international markets.

Suggested Citation

  • Stewart, Mark B., 1989. "Union Wage Differentials, Product Market Influences And The Division Of Rents," Economic Research Papers 268357, University of Warwick - Department of Economics.
  • Handle: RePEc:ags:uwarer:268357
    DOI: 10.22004/ag.econ.268357
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    References listed on IDEAS

    as
    1. Mark B. Stewart, 1983. "On Least Squares Estimation when the Dependent Variable is Grouped," Review of Economic Studies, Oxford University Press, vol. 50(4), pages 737-753.
    2. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
    3. Stewart, Mark B, 1987. "Collective Bargaining Arrangements, Closed Shops and Relative Pay," Economic Journal, Royal Economic Society, vol. 97(385), pages 140-156, March.
    4. Connolly, Robert A & Hirsch, Barry T & Hirschey, Mark, 1986. "Union Rent Seeking, Intangible Capital, and Market Value of the Firm," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 567-577, November.
    5. John M. Abowd, 1987. "Collective Bargaining and the Division of the Value of the Enterprise," NBER Working Papers 2137, National Bureau of Economic Research, Inc.
    6. John M. Abowd & Joseph S. Tracy, 1988. "Market Structure, Strike Activity, and Union Wage Settlements," NBER Working Papers 2595, National Bureau of Economic Research, Inc.
    7. Stewart, Mark B, 1983. "Relative Earnings and Individual Union Membership in the United Kingdom," Economica, London School of Economics and Political Science, vol. 50(198), pages 111-125, May.
    8. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September.
    9. Geroski, Paul A, 1988. "In Pursuit of Monopoly Power: Recent Quantitative Work in Industrial Economics," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 3(2), pages 107-123, April.
    10. William T. Dickens & Kevin Lang, 1985. "Testing Dual Labor Market Theory: A Reconsideration of the Evidence," NBER Working Papers 1670, National Bureau of Economic Research, Inc.
    11. Dewatripont, Mathias, 1987. "Entry deterrence under trade unions," European Economic Review, Elsevier, vol. 31(1-2), pages 149-156.
    12. John Abowd, 1987. "Collective Bargaining and the Division of the Value of the Enterprise," Working Papers 598, Princeton University, Department of Economics, Industrial Relations Section..
    13. John E. Kwoka Jr., 1983. "Monopoly, Plant, and Union Effects on Worker Wages," ILR Review, Cornell University, ILR School, vol. 36(2), pages 251-257, January.
    14. Blanchflower, D. & Oswald, A. & Garrett, M., 1988. "Insider Power In Wage Determination," Papers 319, London School of Economics - Centre for Labour Economics.
    15. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    16. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
    17. Lawrence Mishel, 1986. "The Structural Determinants of Union Bargaining Power," ILR Review, Cornell University, ILR School, vol. 40(1), pages 90-104, October.
    18. Oliver E. Williamson, 1968. "Wage Rates as a Barrier to Entry: The Pennington Case in Perspective," The Quarterly Journal of Economics, Oxford University Press, vol. 82(1), pages 85-116.
    19. repec:fth:prinin:218 is not listed on IDEAS
    20. Ravenscraft, David J, 1983. "Structure-Profit Relationships at the Line of Business and Industry Level," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 22-31, February.
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