Working Paper: NBER ID: w0672
Authors: 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.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Elasticity of labor supply (J20) | Probability of unionization (J50) |
| Demand for labor's convexity (J29) | Probability of unionization (J50) |
| Inelasticity of product demand (D12) | Probability of unionization (J50) |
| Costs of running a union (J51) | Probability of union existing (C12) |
| Costs of running a union (J51) | Wage differential (J31) |
| Antiunion legislation (J58) | Probability of union existence (C62) |
| Antiunion legislation (J58) | Proportion of union workers (J51) |
| Antiunion legislation (J58) | Union wage (J31) |
| Union membership (J51) | Fringe benefits (J32) |