Unions: Rent Extractors or Creators?

Toke Aidt and Vania Sena

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper proposes a model of workplace-specific unions that integrates two (conflicting) views of what unions do: one that unions mainly engage in rent extraction, the other that unions mainly engage in rent creation by providing agency services that increase workplace productivity. In our model, the union leadership makes a choice between the two types of activities, and we demonstrate why it is optimal to engage in both: rent extraction increases the bargained wage rate, rent creation secures higher employment. More importantly, the choice between the two activities depends systematically on the economic and regulatory environment in which the union operates. Unions operating in an environment of intense market competition are mainly engaged in rent extraction. Our model thus suggests that the economic and regulatory environment is an important determinant of “what unions do”, and that changes/differences in this environment can explain changes/differences in union behaviour across time and space.

Keywords: unions; rent creation; rent extraction; product market competition (search for similar items in EconPapers)
JEL-codes: J5 L5 (search for similar items in EconPapers)
Pages: 23
Date: 2002-10
Note: L
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://files.econ.cam.ac.uk/repec/cam/pdf/wp0236.pdf (application/pdf)

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:cam:camdae:0236

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer (jd419@cam.ac.uk).