The Economics of Trade Unions

Abstract

In Chapter 7 the determination of the levels of wages and employment was considered in cases where there is perfect competition among sellers of labour, as well as in the case of monopsony. An important characteristic of the labour market in industrialised countries is the existence of trade unions as organisations of sellers of labour. Trade unions are complex institutions, which can be analysed from social and political as well as economic viewpoints, but in this chapter we concentrate exclusively on the economic analysis of trade unions. In 1975 Johnson conducted a survey of the contents of a wide selection of professional journals in economics, on the basis of which he concluded that the study of trade unions had become a ‘Cinderella’ topic within economics (Johnson, 1975). However, as we shall see in this and the subsequent chapter this state of affairs was quickly to change, to the extent that a number of significant advances occurred during the 1980s and early 1990s in the economic analysis of trade unions.