Product Market Competition and Trade Union Structure
Tinbergen Institute Working Paper No. 2003-005/1
17 Pages Posted: 3 Mar 2003
Date Written: January 2003
Trade unions tend to reduce the dispersion of wages among their members. Skilled workers may therefore have an incentive to separate from an encompassing union and organize into a separate craft union. In this paper, we examine a theoretical model to gain insight into the determinants of the number of trade unions at a firm. We show that imperfect competition in the product market may drive skilled and unskilled workers together, even though unskilled workers use their political power in the trade union to extract rents from the skilled workers. Additionally, we examine the influence of several features of production technology on trade union structure.
Keywords: product market competition, trade union structure, wage dispersion
JEL Classification: J31, J51
Suggested Citation: Suggested Citation