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A Biological Model of Unions

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  • Michael Kremer
  • Benjamin A. Olken

Abstract

This paper applies principles from evolutionary biology to the study of unions. We show that unions which maximize the present discounted wages of current members will be displaced in evolutionary competition by unions with more moderate wage policies that allow their firms to live longer. This suggests that unions with constitutional incumbency advantages that allow leaders to moderate members' wage demands may have a selective advantage. The model also suggests that industries with high turnover of firms will have low unionization rates, and that there may be one equilibrium with high unionization and long-lived firms and another with low unionization and short-lived firms. These predictions seem broadly consistent with the data.

Suggested Citation

  • Michael Kremer & Benjamin A. Olken, 2001. "A Biological Model of Unions," NBER Working Papers 8257, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8257
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    References listed on IDEAS

    as
    1. Moene, K.O. & Wallerstein, M. & Hoel, M., 1992. "Bargaining Structure and Economic Performance," Memorandum 10/1992, Oslo University, Department of Economics.
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    6. Ricardo J. Caballero & Mohamad L. Hammour, 1998. "The Macroeconomics of Specificity," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 724-767, August.
    7. Richard B. Freeman, 1998. "Spurts in Union Growth: Defining Moments and Social Processes," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 265-296 National Bureau of Economic Research, Inc.
    8. Feenstra, Robert & Markusen, James R. & Rose, Andrew K, 1998. "Understanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods," CEPR Discussion Papers 2035, C.E.P.R. Discussion Papers.
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    10. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 835-864.
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    15. Card, David & Olson, Craig A, 1995. "Bargaining Power, Strike Durations, and Wage Outcomes: An Analysis of Strikes in the 1880s," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 32-61, January.
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    Cited by:

    1. Thomas J. Holmes, 2006. "Geographic spillover of unionism," Staff Report 368, Federal Reserve Bank of Minneapolis.

    More about this item

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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