1151 lectures Union Impacts on the Labor Market This week we look at the effects of unions on a number of labor market outcomes: wages, wage inequality, benefits, employment, productivity and profits. I will also touch on effects on worker turnover and savings rates. Recall that although union density has been falling, unions still represent a large number of workers and that they are diverse organizations—differing in the construction trades, in manufacturing, in services and in the public sector. I will be summarizing a large research literature that focuses on the averageeffect of unions—that is, on the impacts of an averageunion. But keep in mind that the effects may vary crucially with the type of union and with the quality of the employer-union relationship, which involves input and commitment from both sides. I will conclude by reviewing the voice model as summarized in E-S at the end of chapter 13. A. Wages 1. The theory of union wage effects: rent-sharing, superior worker, spillover and threat effects a. Rent-sharing model: Unions clearly try to raise wages of union members; in a rent-sharing model, their gains are at the expense of managerial or shareholder rents, not other workers. b. Superior workers: If union wages are higher, employers will try over time to hire better workers and such productive workers will flock to these good jobs. c. Spillover effect: lowers wagesin the non-union sector by shifting labor to that sector. This effect is smaller insofar as there is “wait
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