UNSPECIFIED (1993) AN ECONOMIC-THEORY OF THE OPEN SHOP TRADE-UNION. EUROPEAN ECONOMIC REVIEW, 37 (8). pp. 1599-1620. ISSN 0014-2921

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Abstract

There has been significant interest recently both in the empirical investigation of the determinants of trade union membership, in the U.K. and elsewhere, and in the theoretical analysis of the economic effects of the closed shop trade union. However, there is little rigorous microeconomic explanation of union membership which is relevant for much of the U.K. and similar labour markets where the 'open shop' union is prevalent. This paper attempts to overcome the free-rider problem of explaining union membership in the open shop. We argue that both private pecuniary gains and social influences affect the individuals' union membership decisions, citing evidence in support of these basic assumptions. We show that stable intermediate union density is a possible equilibrium outcome in a generalised social custom model. We also analyse the simultaneous determination of wages and union membership, deriving a number of comparative static results. In particular, we find that both wages and union density depend upon, inter alia, the level of strike pay, the net cost of union membership and the individual's sensitivity to social custom and associated solidarity effects. We argue that the approach is consistent with various stylised facts concerning both wage bargaining and union membership and is able to explain a number of otherwise puzzling features of union membership.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	EUROPEAN ECONOMIC REVIEW
Publisher:	ELSEVIER SCIENCE BV
ISSN:	0014-2921
Date:	December 1993
Volume:	37
Number:	8
Number of Pages:	22
Page Range:	pp. 1599-1620
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/20902

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