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4-19-07 - 151 lecture Models of Union Behavior Union Goals...

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1 151 lecture Models of Union Behavior: Union Goals and Wage Determination We first examine union goals and behavior under conditions of a fixed demand curve for labor. Then we will examine strategies unions can adopt to improve productivity and otherwise increase labor demand—through seeking “mutual gains.” A. Union goals with a given labor demand schedule 1. Suppose that the union’s goals are to increase wages and jobs for its members, but in what combination? 2. Alternative specifications: Do they maximize wages, or jobs, or the wage bill of the members or the wage bill of those with jobs, or dues? Are they even maximizing organizations? 3. What is the impact of having contracts ratified by union votes? Of elections for union leaders? 4. What is the impact of the “employer’s right to manage” clause in union contracts? B. Some formal models of union behavior We will consider the monopoly union model, efficient contracts model and median voter model. 1. The union monopoly model The union has 100 percent density and dictates the wage to the employers. Employers then hire according to the demand for labor schedule. Clearly, wages can be higher and employment will be lower than in a perfectly competitive environment.
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