Inducing political action by workers

Bruno De Borger and Amihai Glazer

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: A firm aiming to influence a governmental policy may benefit from political action by its stakeholders, such as workers. This paper studies the behavior of such a firm, showing that workers will have a greater incentive to engage in costly political activity against the governmental policy the greater their number and the higher the wage. The firm may therefore profit from paying above- market wages and from hiring what might appear to be an inefficiently large number of workers. And because unions may overcome free-rider problems of uncoordinated political effort, a firm may favor unionization, or be less opposed to unionization than it would otherwise be. The results of this paper can also explain why firms may little reduce wages in a recession, and why the higher wages paid by unionized firms do not reduce survival rates of these firms.

Keywords: Political actions; Union behavior; Wage and employment policies (search for similar items in EconPapers)
JEL-codes: D21 J31 J51 L51 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-05
New Economics Papers: this item is included in nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2015011

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