Regulating Unions and Collective Bargaining

In this chapter, we present an outline of the economic analysis of the regulation of unions and collective bargaining. We begin with the simple model of the market for union services and analyze regulations that may increase or decrease either the demand or supply for union representation. In this way we provide an economic basis for evaluating government policies such as a prohibition on yellow dog contracts, a prohibition on discriminatory discharges, right to work laws and card check procedures for selecting a union, which may influence the demand and supply for union services and accordingly union density in the economy. Next we present simple expositions of the primary models of the impact of unions on wages and employment, including the monopoly model, the efficient contract or collective voice model and the median voter model. These models provide the basic framework for analyzing the impact of collective bargaining on equity, efficiency and voice. Finally, we discuss the concept of bargaining power and present two simple models of collective bargaining that depict the problem of strikes alternatively as a function of imperfect information and strategic behavior. These models provide a basis for evaluating government policies that are designed to change the relative bargaining power of labor and management such as allowing permanent replacements, allowing offensive lock-outs and allowing or prohibiting secondary boycotts. These models also allow us to evaluate the potential for government policies to promote cooperative labor relations and industrial peace such as requiring exchanges of information, good faith bargaining and appropriate bargaining units. The ultimate arbiter of the efficacy of various government policies is, of course, empirical work. Where appropriate, we cite the most important empirical work that is available on the examined problems