The Union Threat
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[1] Cornell University
Cornell University
City of Ithaca, Estados Unidos
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- Localización: Review of economic studies, ISSN 0034-6527, Vol. 87, Nº 6, 2020, págs. 2859-2892
- Idioma: inglés
- Texto completo no disponible (Saber más ...)
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Resumen
This article develops a search theory of labour unions in which the possibility of unionization distorts the behaviour of non-union firms. In the model, unions arise endogenously through a majority election within firms. As union wages are set through a collective bargaining process, unionization compresses wages and lowers profits. To prevent unionization, non-union firms over-hire high-skill workers— who vote against the union— and under-hire low-skill workers— who vote in its favour. As a consequence of this distortion in hiring, firms that are threatened by unionization hire fewer workers, produce less and pay a more concentrated distribution of wages. In the calibrated economy, the threat of unionization has a significant negative impact on aggregate output, but it also reduces wage inequality.
