A Biological Model of Unions

Michael Kremer () and Benjamin A. Olken

No 8257, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper applies principles from evolutionary biology to the study of unions. We show that unions which maximize the present discounted wages of current members will be displaced in evolutionary competition by unions with more moderate wage policies that allow their firms to live longer. This suggests that unions with constitutional incumbency advantages that allow leaders to moderate members' wage demands may have a selective advantage. The model also suggests that industries with high turnover of firms will have low unionization rates, and that there may be one equilibrium with high unionization and long-lived firms and another with low unionization and short-lived firms. These predictions seem broadly consistent with the data.

JEL-codes: J51 E24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo and nep-hpe
Date: 2001-04
Note: EFG LS
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