Abstract
The classical and neoclassical economic theory posits the existence of a homogeneous labor market for the entire economy. If the labor market is unified, labor in one industry can shift to another industry. In such homogeneous labor markets, the total labor demand and total labor supply determine the economy-wide wage rate. It is possible to revise the abovementioned standard model by introducing industry-specific labor supply. Besides, the equilibrium demand and supply of labor depends critically on the extent of labor organization at the level of the industry. This chapter provides a detailed theoretical structure of the wage bargaining model in the industries, where the unions negotiate with the managers to determine the wage–employment combination. The right-to-manage model and the efficient bargaining model are reemphasized in this chapter to provide an important background for reflecting on the choice of investment in the presence of labor unions. The rent-seeking activities of the labor union are subsequently discussed in view of the declining union participation, globally. We conclude by invoking the complex issues of research and development, hold-up problems, on-the-job training, and employment protection, all in connection with the union models, as the cornerstone of labor and industrial relations.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Acemoglu, D. 1997. Training and innovation in an imperfect labour market. Review of Economic Studies 64: 445–464.
Acharya V.V., Baghai R.P. Subramanian K.V. 2010. Labor laws and innovation, Working Paper 16484 http://www.nber.org/papers/w16484, National Bureau of Economic Research.
Agell, Jonas. 1999. On the benefits from rigid labour markets: Norms, market failures, and social insurance. The Economic Journal 109 (453): F143–F164.
Akerlof G.A. 1984. An Economist’s book of tales. Cambridge University Press, Cambridge.
Belot, M., J. Boone, and Jan Van Ours. 2007. Welfare-improving employment protection. Economica 74 (295): 381–396, 08, London School of Economics and Political Science.
Blaug M. 1962. Economic theory in retrospect , 1st. Ed. Homewood EL, Richard D Irwin.
Bond S., and Reenen J.V. 2002. Micro econometric models of investment and employment in Heckman and Leamer eds. Handbook of Econometrics , Vol. 6, North Holland, Amsterdam.
Bronars, S.G., and D.R. Deere. 1991. The threat of unionization, the use of debt, and the preservation of shareholder wealth. The Quarterly Journal of Economics 106 (1): 231–254.
Bronars, S.G., D.R. Deere, and J.S. Tracy. 1994. ‘The effects of unions on firm behavior: an empirical analysis using firm-level data,’ Industrial Relations 33: 426-451.
Dickens, William T., and Jonathan Leonard. 1985. Structural changes in unionization: 1973–1981. Industrial and Labor Relations Review 38 (3): 323–334.
Dowrick, Steve, and Barbara J. Spencer. 1994. Union attitudes to labor-saving innovation: When are unions luddites? Journal of Labor Economics 12 (2): 316–344.
Dunlop, John. 1944. Wage determination under trade union. New York: Macmillan.
Freeman, Richard. 1988. Contraction and expansion: The divergence of private sector and public sector unionism in the United States. Journal of Economic Persnectives 2 (2): 63–88.
Green, Francis, Stephen, Machin, and David Wilkinson. 1999. Trade unions and training practices in British workplaces. Industrial and Labor Relations Review 52 (2): 179–195.
Grout, P. 1984. Investment and wages in the absence of binding contracts: A nash bargaining approach. Econometrica 52: 449–460.
Heijdra, B. 2009. Foundations of modern macroeconomics. 2nd ed. UK: Oxford University Press.
Hirsch B.T., and Prasad K. 1995. Wage-employment determination and a union tax on capital; can the theory and evidence be reconciled, Economics Letters 48 (April), pp. 61–71.
Hirsch, Barry T. 1991. “Union Coverage and Profitability among U.S. Firms,” Review of Economics and Statistics 73: 69–77.
Leontief, Wassily. 1946. The pure theory of the guaranteed annual wage contract. Journal of Political Economy 54 (2): 76–79.
Linneman, Peter D., Michael L. Wachter, and William H. Carter. 1990. Evaluating the evidence on union employment and wages. Industrial and Labor Relations Review 44 (1): 34–53.
McDonald, I.M., and R.M. Solow. 1981. Wage bargaining and employment. American Economic Review 71 (5): 896–908.
Menezes-Filho, N., and J.V. Reenen. 2003. Unions and innovation: A survey of the theory and empirical evidence. Centre for Economic Policy Research, 90–98, London EC1V 7RR, UK.
Menezes-Filho, N., Ulph, D., and Van Reenen, J. 1998. “R&D and Unionism: Comparative Evidence from British Companies and Establishments”, Industrial and Labor Relations Review, vol. 52, no. 1.
Modigliani, F., and M. Miller. 1958. The cost of capital, corporation finance and the theory of investment. American Economic Review 48 (3): 261–297.
Murphy, Gavin, Iulia Siedschlag, and John McQuinn. 2012. Employment protection and innovation intensity. Neujobs working paper No. D 6.4. Economic and Social Research Institute, Department of Economics, Trinity College, Ireland.
van der Ploeg, Rik. 1987. Trade unions, investment and employment. European Economic Review 31 (6): 1465–1492.
Robinson, Joan. 1933. The economics of imperfect competition. London: Macmillan (2nd ed., 1969).
Shapiro, C., and J. Stiglitz. 1984. Equilibrium unemployment as a worker discipline device. American Economic Review 74: 433–444.
Simons, Herbert. 1944. Some reflections on syndicalism. Journal of Political Economy 52 (1): 1–25.
Tang, H. 2012. Labor market institutions, firm-specific skills and trade patterns. Journal of International Economics 87: 337–351.
Tauman, Y., and Y. Weiss. 1987. Labor unions and the adoption of new technology. Journal of Labor Economics 5: 477–501.
Ulph, A., and D. Ulph. 1989. Bargaining structures and delay in innovation. Scandinavian Journal of Economics 90: 475–491.
Ulph, A., and D. Ulph. 1994. Labour markets and innovation. Ex-post bargaining. European Economic Review 38: 195–210.
Ulph, A., and D. Ulph. 1998. Labour markets, bargaining and innovation. European Economic Review 42: 931–939.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2015 Springer India
About this chapter
Cite this chapter
Kar, S., Datta, D. (2015). Labor Unions: Concepts, Models, and Public Policies. In: Industrial and Labor Economics. India Studies in Business and Economics, vol 25. Springer, New Delhi. https://doi.org/10.1007/978-81-322-2017-6_6
Download citation
DOI: https://doi.org/10.1007/978-81-322-2017-6_6
Published:
Publisher Name: Springer, New Delhi
Print ISBN: 978-81-322-2016-9
Online ISBN: 978-81-322-2017-6
eBook Packages: Business and EconomicsEconomics and Finance (R0)