Unionization imposes substantial costs on employers. This paper develops a model that recognizes that, as a result, employers will set wages and employment taking into account the effect of their decisions on workers' incentives to organize. This model of employer behavior allows us to address...

When we analyse the labour market consequences of labour tax reforms in a model of firm-union wage bargaining, minor changes in the formulation of the union's fallback option can have drastic effects. This paper compares two variants of the model in which either workers have no reemployment...

Labor organizations mobilize employees for political purposes. In this study, we examine how labor unions stimulate political polarization within firms. We combine datasets on employee-level political contributions and union elections in the United States. In a regression discontinuity design,...

Labor unions, chiefly through collective organizing and bargaining, almost universally increase the wages of their members, even after controlling for individual, job, firm, and other characteristics that affect pay (Fang and Verma 2002). This earnings advantage of union workers is known as the...

The basic trade union model is extended to allow for a more sophisticated unemployment benefit system consisting of two benefit levels, one for short-term and one for long-term unemployed, and a rule determining whether an unemployed is short- or long-term. The purpose of this extension is...

The importance of the design of the income tax system for the incentive to supply effort is considered for both a situation where firms (efficiency wage model) or unions (monopoly union model) have the power to determine wages. A tax reform raising marginal taxes at all income levels and...

This article proposes a new theoretical framework - the strategic dynamic certification model - to explain how union certification processes operate. Statutory certification procedures are not neutral. Instead, they produce particular incentives, disincentives, and opportunities for employers,...

We document that labor unionization rates are associated with lower levels of managerial overinvestment and underinvestment for a sample of 3,731 U.S. publicly traded firms over the period 1983-2013. This result is consistent with the explanation that labor unions can play a governance role in...

Using a money-in-the-utility-function model, we present long-run stagnation where insatiable demand for money secularly causes deficient aggregate demand and thereby unemployment in the presence of nominal wage stickiness attributable to union wage setting. In this long-run stagnation, generous...

This paper extends the Diamond (1980) model with labor unions to study optimal income taxation and to analyze whether unions can be desirable for income redistribution. Unions bargain with firms over wages in each sector and firms unilaterally determine employment. Unions raise the efficiency...