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A Competitive Theory of Monopoly Unionism

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  • Edward P. Lazear

Abstract

This paper sets up a microeconomic theory of labor unions. It discusses their formation and goals, their hierarchical structure, and the nature of rent distribution. The theory provides predictions for the probability that an industry or occupation will be unionized, the proportion of that industry that will be unionized, and observed wage differentials within that industry. It discusses the way that those values change in response to changes in the supply of labor, demand for labor, cost of organizing the union, and cost of defeating the union. Institutions such as featherbedding, fringe benefits, and seniority are rationalized in this framework. The model is consistent with competitive factor and product markets.

Suggested Citation

  • Edward P. Lazear, 1981. "A Competitive Theory of Monopoly Unionism," NBER Working Papers 0672, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0672
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    References listed on IDEAS

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    1. Crawford, Vincent P, 1979. "On Compulsory-Arbitration Schemes," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 131-159, February.
    2. Carl M. Stevens, 1958. "On the Theory of Negotiation," The Quarterly Journal of Economics, Oxford University Press, vol. 72(1), pages 77-97.
    3. James N. Dertouzos & John H. Pencavel, 1980. "Wage and Employment Determinants under Trade Unionism: The InternationalTypographical Union," NBER Working Papers 0570, National Bureau of Economic Research, Inc.
    4. Harry G. Johnson & Peter Mieszkowski, 1970. "The Effects of Unionization on the Distribution of Income: A General Equilibrium Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 84(4), pages 539-561.
    5. S. Rosen, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," Review of Economic Studies, Oxford University Press, vol. 36(2), pages 185-196.
    6. Diewert, W E, 1974. "The Effects of Unionization on Wages and Employment: A General Equilibrium Analysis," Economic Inquiry, Western Economic Association International, vol. 12(3), pages 319-339, September.
    7. Hall, Robert E & Lilien, David M, 1979. "Efficient Wage Bargains under Uncertain Supply and Demand," American Economic Review, American Economic Association, vol. 69(5), pages 868-879, December.
    8. Freeman, Richard B, 1976. "Individual Mobility and Union Voice in the Labor Market," American Economic Review, American Economic Association, vol. 66(2), pages 361-368, May.
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    Cited by:

    1. Giuseppe Bertola & Francine Blau & Lawrence Kahn, 2007. "Labor market institutions and demographic employment patterns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 833-867, October.
    2. Addison, John T. & Heywood, John S. & Wei, Xiangdong, 2001. "Unions and Plant Closings in Britain: New Evidence from the 1990/98 WERS," IZA Discussion Papers 352, Institute for the Study of Labor (IZA).
    3. Robin Naylor, 1995. "Unions in Decline?," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 22, pages 127-142.
    4. Steven G. Allen, 1987. "Declining Unionization in Construction: The Facts and the Reasons," NBER Working Papers 2320, National Bureau of Economic Research, Inc.
    5. Henry S. Farber, 1984. "The Analysis of Union Behavior," NBER Working Papers 1502, National Bureau of Economic Research, Inc.
    6. Ruiz-Verdu, Pablo, 2007. "The economics of union organization: Efficiency, information and profitability," Labour Economics, Elsevier, vol. 14(5), pages 848-868, October.
    7. Richard Blundell, 1993. "Offre de travail et fiscalité : une revue de la littérature," Économie et Prévision, Programme National Persée, vol. 108(2), pages 1-18.
    8. John DiNardo & Kevin F. Hallock, 2000. "When Unions "Mattered": Assessing the Impact of Strikes on Financial Markets: 1925-1937," NBER Working Papers 7794, National Bureau of Economic Research, Inc.
    9. Ruiz-Verdú, Pablo, 2002. "Employer behavior when workers can unionize," DEE - Working Papers. Business Economics. WB wb020803, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    10. Giacomo Corneo, 1993. "Semi-unionized bargaining with endogenous membership and management opposition," Journal of Economics, Springer, vol. 57(2), pages 169-188, June.
    11. Corneo, Giacomo, 1995. "Social custom, management opposition, and trade union membership," European Economic Review, Elsevier, vol. 39(2), pages 275-292, February.
    12. repec:eee:labchp:v:2:y:1986:i:c:p:1039-1089 is not listed on IDEAS
    13. Stephen Machin, 1995. "Plant Closures and Unionization in British Establishments," British Journal of Industrial Relations, London School of Economics, vol. 33(1), pages 55-68, March.
    14. Edgar Preugschat, 2009. "Unionization Patterns and Firm Reallocation," 2009 Meeting Papers 1114, Society for Economic Dynamics.

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