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Inducing political action by workers

Author

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  • DE BORGER, Bruno
  • GLAZER, Amihai

Abstract

A firm aiming to influence a governmental policy may benefit from political action by its stakeholders, such as workers. This paper studies the behavior of such a firm, showing that workers will have a greater incentive to engage in costly political activity against the governmental policy the greater their number and the higher the wage. The firm may therefore profit from paying above- market wages and from hiring what might appear to be an inefficiently large number of workers. And because unions may overcome free-rider problems of uncoordinated political effort, a firm may favor unionization, or be less opposed to unionization than it would otherwise be. The results of this paper can also explain why firms may little reduce wages in a recession, and why the higher wages paid by unionized firms do not reduce survival rates of these firms.

Suggested Citation

  • DE BORGER, Bruno & GLAZER, Amihai, 2015. "Inducing political action by workers," Working Papers 2015011, University of Antwerp, Faculty of Applied Economics.
  • Handle: RePEc:ant:wpaper:2015011
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    More about this item

    Keywords

    Political actions; Union behavior; Wage and employment policies;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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