Inducing political action by workers

• Autores: Bruno De Borger, Amihai Glazer
• Localización: Southern Economic Journal, ISSN 0038-4038, ISSN-e 2325-8012, Vol. 81, Nº. 4, 2015, págs. 1117-1144
• Idioma: inglés
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• Resumen

  • A firm aiming to influence a governmental policy may benefit from political action by its stakeholders, such as workers. This article studies the behavior of such a firm, showing that workers will have a greater incentive to engage in costly political activity against the governmental policy the greater their number and the higher the wage. The firm may, therefore, profit from paying above-market wages and from hiring what might appear to be an inefficiently large number of workers. And because unions may overcome free-rider problems of uncoordinated political effort, a firm may favor unionization, or be less opposed to unionization than it would otherwise be. The results of this article can also explain why firms may little reduce wages in a recession, and why the higher wages paid by unionized firms do not reduce survival rates of these firms.