Deunionization, Technical Change and Inequality

Philippe Aghion, Daron Acemoglu and Giovanni Violante

No 2764, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We argue that inequality and rapid deunionization are related, and that skill-biased technical change has been an important factor in deunionization as well as in the rise in inequality. Skill-biased technical change causes deunionization because it increases the outside option of skilled workers, undermining the coalition among skilled and unskilled worker in support of unions. Our approach implies that although deunionization is not the underlying cause of the increase in inequality, it amplifies the direct effect of skill-biased technical change by removing the wage compression imposed by unions. We also show that deunionization may happen inefficiently.

Keywords: Deunionization; Efficiency-enhancing unions; Rent-seeking unions; Skill-biased technical change; Wage inequality (search for similar items in EconPapers)
JEL-codes: J30 J50 O30 (search for similar items in EconPapers)
Date: 2001-04
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Citations: View citations in EconPapers (160)

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