Unions in a Frictional Labor Market

We model a labor market with search and matching frictions where some or all workers belong to a (centralized) union, both in the case where coverage is exogenously given and where it is endogenous. Unions are assumed to choose identical wages for all unionized workers, and firms are assumed not to be able to discriminate with respect to union status in their hiring and firing policies. We characterize efficiency and unemployment outcomes for this economy.