Comment on A. Oswald, “The Economic Theory of Trade Unions—An Introductory Survey”

Abstract

The importance of trade unions in any useful analysis of the behavior of aggregate economic variables in most O.E.C.D. countries has recently come to be widely recognized. If unions represent most workers (as in Scandinavia) or even workers in a significant minority of industries (as in the United States), their existence cannot simply be ignored. Any plausible economic theory of what trade unions attempt and are able to do would suggest that they will have a major impact on the general level and/or structure of real wages, and any sensible theory of employment determination would imply that wage rates will have an impact on the equilibrium unemployment rate. Thus, public policy toward trade unions may be an important component of macroeconomic policy. There is, therefore, a great deal of incentive to build good microeconomic models of trade union behavior, for these might provide useful insights into the way the aggregate economy operates.