The theory of economic regulation and public choice and the determinants of public sector bargaining legislation

Conclusions and implications

In this study we used the theory of economic regulation and public choice to derive a model to explain the pattern of public sector bargaining laws among the states. We find this type of legislation is influenced by the following demand factors: (1) the extent of public sector union membership, which represents the interest group hypothesis, has a positive influence on pro-union legislation; (2) the extent of employer opposition to unions, as measured by unfair labor practice charges against employers in representation elections, has a negative effect on bargaining laws; (3) two taste variables — the salaries of public employees and the percent of nonwhite employment in the state — have a positive influence on these laws. A result which will be surprising to many people is that the extent of private sector union membership has no significant influence on the passage of public sector bargaining legislation.

Our empirical analysis indicates that supply factors are also important in explaining the pattern of public employee bargaining laws across the state. We find that states are more likely to enact pro-union legislation under the following conditions: (1) constituents appear to hold pro-labor views as represented by their Congressmen's voting record; (2) neighboring states have passed mandatory bargaining laws; and (3) when competition is greater among the political parties.

Finally, we tested several hypotheses related to the recent studies by Reid and Kurth (1988, 1989) concerning the rise of militant unionism among public employees since the early 1960s. Our empirical results are not supportive of their arguments. Specifically, we find the following variables to have no significant influence on the passage of public sector bargaining legislation: (1) the degree of federal revenue sharing to the states; (2) the degree of population homogeneity within the states; and (3) the percentage of the state's public employees covered by civil service regulations.

Our results strongly suggest that public-sector bargaining legislation should be treated as endogenous. The recent plethora of studies analyzing the effects of such legislation in the context of single-equation models are of doubtful value. Our analysis of bargaining laws suggests there are likely to be strong interactive effects between the legal status of public employee bargaining rights, the extent of unionization, and wage rates. If so, the “true” effects of bargaining status on unions, wages, and other characteristics of public employment should be measured in the context of a simultaneous set of equations where bargaining laws are treated as endogenous variables.