Professional Documents
Culture Documents
Chapter 13
Unions and the Labour Market
Table 13.1 – Union Membership and
Bargaining Coverage, Selected Countries,
1980 and 1984
Figure 13.1 – Union Membership and
Membership as a Proportion of Non-
Agricultural Paid Workers, 1921-2002
Table 13.2 – Percentage of All Wage and
Salary Workers Covered by a Collective
Agreement, 1997 and 2001
Figure 13.2 – Effects of Demand Growth
and Wage Elasticity of Demand on the
Market Constraints Faced by Unions
Simple union model-4
assumptions
DL known
Layoffs based on seniority—LIFO
Ui = f(Yi)---self-interest
Wage policy is determined by majority vote.
What happens?
Simple model leads to problems.
Figure 13.3 – Union Maximizes Utility
Subject to the Constraint of the Labour
Demand Curve: Monopoly Union
Maximize TWB and Max.Rent
TWB= W*N
Economic Rent R=W-OC
These are special cases of the indifference
curve approach.
Here, U=f(TWB) OR U=f(∑Rents)
With TWB, equilibrium is where ED=1.MD=0
With Rent max. equilibrium is at MD=OC
Union Wage Rigidity
http://www.jstor.org/pss/724852
Rees reference-need to access through
library website or go to hard copy in library.
Unions distort the allocation of labour
resource and generate a deadweight loss.
Rees estimates how large this is.
Figure 13.6 – The Demand for and Supply
of Unionization
Figure 13.7 – Union Membership as a
Proportion of All Workers, Canada and
United States, 1980-1997
Figure 13.8 – Work Stoppages in Canada,
1901-2000 –peaks with inflation
Figure 13.9 – Hicks’s Bargaining Model
and Expected Strike Length
Figure 13.10 – Spillover Effects of Unions
on Wages and Employment
Figure 13.11 – Threat Effects of Unions on
Wages and Employment in Nonunion
Sector
Table 13A.1 – Percentage of U.S. Wage
and Salary Workers Who Are Union
Members, by Selected Characteristics, 2000