The Impact of Collective Bargaining: Can the New Facts Be Explained by Monopoly Unionism?

Richard Freeman and James Medoff

No 837, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we focus our attention on the question of whether union/nonunion differences in nonwage outcomes can, in fact, be explained in terms of standard price-theoretic responses to real wage effects, as opposed to the real effect of unionism on economic behavior. We reach three basic conclusions. First, unions and collective bargaining have real economic effects on diverse nonwage variables which cannot be explained either in terms of price-theoretic responses to union wage effects or be attributed to the poor quality of our econometric "experiments". Second, we find that while sensitivity analyses of single-equation results and longitudinal experiments provide valuable checks on cross-sectional findings, multiple-equations approaches produced results which are too sensitive to small changes in models or samples to help resolve the questions of concern. Finally, on the basis of these findings we conclude that the search for an understanding of what unions do requires more than the standard price theoretic "monopoly" model of unionism. New (and/or old) perspectives based on institutional or industrial relations realities, contractarian or property rights theories, or other potential sources of creative views are also needed.

Date: 1982-01
Note: LS
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Published as "The Impact of the Percentage Organized On Union and Nonunion Wages", Review of Economics and Statistics, Vol. 63, no. 4 (1981): 561-572.

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