The impact of unionization costs when firm-selection matters

Marco de Pinto and Jörg Lingens

Labour Economics, 2019, vol. 60, issue C, 50-63

Abstract: How does an increase in unionization costs, i.e. costs which arise when workers are organized by a union, affect the productivity distribution of active firms, wage inequality and welfare? In this paper, we build a model with costly, endogenous unionization, heterogeneous firms as well as free market entry/exit to analyze these questions. If unionization costs are relatively low (high), we find that an increase reduces (raises) average productivity and welfare. Additionally, we find a hump-shaped relationship between unionization costs and wage inequality. These results suggest that policies aiming at increasing unionization costs could worsen economic performance.

Keywords: Unionization costs; Endogenous unionization; Firm-selection; Welfare; Wage inequality (search for similar items in EconPapers)
JEL-codes: J51 L11 L16 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927537119300545
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:60:y:2019:i:c:p:50-63

DOI: 10.1016/j.labeco.2019.05.002

Access Statistics for this article

Labour Economics is currently edited by A. Ichino

More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().