The Economic Behavior of Trade Unions
A trade union is an organized association of workers formed for the protection and promotion of their common interests. The standard view of unions is that they are monopoly organizations that improve the welfare of members, principally by raising wages above the competitive level. For a union to be able to increase wage rates above the competitive level, there must be some surplus that can be shared between the firm and the union, and the union must have some bargaining power to induce the firm to share this surplus. This article investigates the conditions under which a union can increase wages, and explores ways of modeling the competing preferences of unions and management. The article also notes the arguments suggesting that, in the presence of imperfect information and uncertainty, unions may enhance efficiency. To the extent that unions reduce labor turnover and negotiating costs, they may increase the available surplus to be shared between parties.
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- Pierre Cahuc & AndrÃ© Zylberberg, 2004.
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 026203316x, January.
- Pierre Cahuc & Stéphane Carcillo & André Zylberberg, 2014. "Labor Economics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01076752, HAL.
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- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
- Alison L. Booth, 1985. "The Free Rider Problem and a Social Custom Model of Trade Union Membership," The Quarterly Journal of Economics, Oxford University Press, vol. 100(1), pages 253-261.
- Douglas H. Blair & David L. Crawford, 1984. "Labor Union Objectives and Collective Bargaining," The Quarterly Journal of Economics, Oxford University Press, vol. 99(3), pages 547-566.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December. Full references (including those not matched with items on IDEAS)
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