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The Efficiency of Collective Bargaining in Public School

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  • Daniel S. Hosken

    (Crest)

  • David Margolis

    (Crest)

Abstract

This paper develops a bargaining model of wage and employment determination for the public sector. The solution to the model generates structural wage and employment equations that are estimated using data from New York State teacher-school district collective bargaining agreements. An advantage of this approach is that the major collective bargaining models (monopoly nion, right to manage, efficient contracting, and inefficient contracting) are nested in the structural equations based on flexible functional forms and these models can be empirically tested as restrictions on estimated model parameters. The empirical results suggest that the allocation of resources generated by ollective bargaining in New York State public schools is, by and large, not Pareto efficient. Furthermore, it is possible to estimate separate measures of union bargaining power over wages and employment. Empirically, it appears that union bargaining power over wages is around 0.53, while bargaining power over employment is around 0.71. In addition, the paper demonstrates the importance of controlling for the nature of the collective agreement when measuring the level of public services that flow to a community in the presence of a unionized public sector work force.
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Suggested Citation

  • Daniel S. Hosken & David Margolis, 1997. "The Efficiency of Collective Bargaining in Public School," Working Papers 97-55, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:97-55
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    References listed on IDEAS

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    1. Richard B. Freeman & Casey Ichniowski, 1988. "When Public Sector Workers Unionize," NBER Books, National Bureau of Economic Research, Inc, number free88-1, April.
    2. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-1078, September.
    3. Abowd, John M, 1989. "The Effect of Wage Bargains on the Stock Market Value of the Firm," American Economic Review, American Economic Association, vol. 79(4), pages 774-800, September.
    4. Cramton, Peter C & Tracy, Joseph S, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," American Economic Review, American Economic Association, vol. 82(1), pages 100-121, March.
    5. Ashenfelter, Orley & Johnson, George E, 1969. "Bargaining Theory, Trade Unions, and Industrial Strike Activity," American Economic Review, American Economic Association, vol. 59(1), pages 35-49, March.
    6. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 3-39, June.
    7. Barry T. Hirsch & David A. Macpherson, 1993. "Union Membership and Coverage Files from the Current Population Surveys: Note," ILR Review, Cornell University, ILR School, vol. 46(3), pages 574-578, April.
    8. Currie, Janet, 1991. "Employment Determination in a Unionized Public-Sector Labor Market: The Case of Ontario's School Teachers," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 45-66, January.
    9. Thomas Romer & Howard Rosenthal, 1979. "Bureaucrats Versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 563-587.
    10. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-139, March.
    11. Eberts, Randall W & Stone, Joe A, 1986. "On the Contract Curve: A Test of Alternative Models of Collective Bargaining," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 66-81, January.
    12. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    13. Megdal, Sharon Bernstein, 1984. "A model of local demand for education," Journal of Urban Economics, Elsevier, vol. 16(1), pages 13-30, July.
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    Cited by:

    1. Lionel Fontagné & Daniel Mirza, 2001. "International Trade and Rent Sharing in Developed and Developing countries," Working Papers 2001-09, CEPII research center.
    2. Fontagne, Lionel & Mirza, Daniel, 2007. "International trade and rent sharing among developed and developing countries," Economic Modelling, Elsevier, vol. 24(3), pages 523-558, May.
    3. Amigues, Jean-Pierre & Favard, Pascal & Gaudet, Gerard & Moreaux, Michel, 1998. "On the Optimal Order of Natural Resource Use When the Capacity of the Inexhaustible Substitute Is Limited," Journal of Economic Theory, Elsevier, vol. 80(1), pages 153-170, May.
    4. Touhami, A. & Martens, A., 1996. "Macroemesures in Computable General Equilibrium Models: a Probabilistic Treatment with an Application to Morocco," Cahiers de recherche 9621, Universite de Montreal, Departement de sciences economiques.

    More about this item

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • I20 - Health, Education, and Welfare - - Education - - - General

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