Working Paper: NBER ID: w18079
Authors: Emin M. Dinlersoz; Jeremy Greenwood
Abstract: Union membership displayed a ∩-shaped pattern over the 20th century, while the distribution of income sketched a ∪. A model of unions is developed to analyze these phenomena. There is a distribution of firms in the economy. Firms hire capital, plus skilled and unskilled labor. Unionization is a costly process. A union decides how many firms to organize and its members' wage rate. Simulation of the developed model establishes that skilled-biased technological change, which affects the productivity of skilled labor relative to unskilled labor, can potentially explain the above facts. Statistical analysis suggests that skill-biased technological change is an important factor in de-unionization.
Keywords: unions; skill-biased technological change; income inequality
JEL Codes: J23; J24; J51; L11; L16; L23; O14; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| skill-biased technological change (J24) | decline in unionization rates (J50) |
| increase in productivity of skilled labor (J24) | decrease in demand for unskilled labor (F66) |
| decline in demand for unskilled labor (F66) | decline in union membership (J50) |
| skill-biased technological change (J24) | rise in income inequality (D31) |