Working Paper: NBER ID: w1452
Authors: Richard B. Freeman
Abstract: This paper argues that public sector labor relations is best understood in a framework that focuses on unions' ability to shift demand curves rather than to raise wages, as is the case in the private sector. It reviews the public sector labor relations literature and finds that: (i) public sector unionism has flourished as a result of changes in laws; (2) the effects of public sector unions on wages are likely to have been underestimated; (3) public sector unions have a somewhat different effect on wage structures than do private sector unions; (4) compulsory arbitration reduces strikes with no clearcut impact on the level of wage settlements; (5) public sector unions have diverse effects on non-wage outcomes as do private sector unions. In terms of evaluating public sector unionism, the paper argues that by raising both the cost of public services (taxes) and the amount of services public sector unionism involves a different welfare calculus than private sector unionism.
Keywords: Public Sector; Unionism; Labor Relations
JEL Codes: J51; J52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Collective bargaining laws (J58) | Increase in union representation among public employees (J58) |
| Public sector unions (J45) | Influence demand for labor (J29) |
| Collective bargaining laws (J58) | Growth of public sector unionism (J58) |
| Public sector unions (J45) | Different impact on wage structures compared to private sector unions (J51) |
| Compulsory arbitration mechanisms (J52) | Reduce strikes (J52) |
| Compulsory arbitration mechanisms (J52) | No clear impact on wage settlements (J52) |
| Public sector unions (J45) | Affect non-wage outcomes (J39) |