Conclusion
I have attempted to distill a quite sizable body of literature written by modern economists on the theory of labor unions, with particular emphasis given to the “two faces” view of unions developed by Freeman and Medolf in What Do Unions Do? Many important ideas and contributions have necessarily been omitted, but hopefully the main contours and implications are captured.
Similar content being viewed by others
References
Addison, John and Barry Hirsch. “The Economic Effects of Employment Regulation: What Are the Limits? ” In Bruce Kaufman, ed. Government Regulation of the Employment Relationship. Madison, Wisc: Industrial Relations Research Association, 1997, pp. 125–78.
Addison, John and John Chilton. “Models of Union Behavior.” In David Lewin, Daniel Mitchell, and Mahmood Zaidi, eds. The Human Resource Management Handbook, Part II. Greenwich, Conn.: JAI Press, 1997, pp. 157–96.
Akerlof, George. “The Fair-Wage-Effort Hypothesis and Unemployment.” Quarterly Journal of Economics 105 (May 1990): 255–84.
— and Janet Yellen. Efficiency Wage Models of the Labor Market. New York: Cambridge University Press, 1986.
Altman, Morris. Worker Satisfaction and Economic Performance. Armonk, N.Y.: M.E. Sharpe, 2000.
Argyrous, George, Mathew Forstater, and Gary Mongiovi. Growth, Distribution, and Effective Demand. Armonk, N.Y.: M.E. Sharpe, 2003.
Barker, George. An Economic Analysis of Trade Unions and the Common Law. Brookfield, Vt.: Avebury, 1997.
Bennett, James T. and Bruce E. Kaufman. “Conclusion: the Future of Private Sector Unionismin the U.S. — Assessment and Forecast.” In James Bennett and Bruce Kaufman, eds. The Future of Private Sector Unionism in the United States. Armonk, N.Y.: M.E. Sharpe, 2002, pp. 359–86.
Bennett, James T. and M. Johnson. “The Impact of Right to Work Laws on the Economic Behavior of Local Unions — A Property Rights Perspective.” Journal of Labor Research 1 (Spring 1980): 1–28.
Bennett, James and Thomas DiLorenzo. “Unions, Politics, and Protectionism.” Journal of Labor Research 5 (Summer 1984): 309–14.
Blanchflower, David, Andrew Oswald, and Peter Sanfey. “Wages, Profits, and Rent-Sharing.” Quarterly Journal of Economics 111 (February 1996): 227–51.
Boal, William and Michael Ransom. “Monopsony in the Labor Market.” Journal of Economic Literature 35 (March 1997): 86–112.
Booth, Alison. The Economics of Trade Unions. New York: Cambridge University Press, 1995.
Bronfenbrenner, Martin. Income Distribution Theory. Chicago: Aldine, 1971.
Budd, John. “Institutional and Market Determinants of Wage Spillovers: Evidence from UAW Pattern Bargaining.” Industrial Relations 36 (January 1997): 97–116.
Burda, Michael. “Membership, Seniority and Wage Setting in Democratic Labour Unions.” Economica 57 (November 1990): 455–66.
Card, David. “The Effect of Unions on Wage Inequality in the U.S. Labor Market.” Industrial and Labor Relations Review 54 (January 2001): 296–315.
— and Alan Krueger. Myth and Measurement: The New Economics of the Minimum Wage. Princeton: Princeton University Press, 1995.
Chaison, Gary and Barbara Bigelow. Unions and Legitimacy. Ithaca, N.Y.: Cornell University Press, 2001.
Coase, Ronald. “The Nature of the Firm.“ Economica 4 (November 1937): 386–405.
Commons, John. Institutional Economics: Its Place in Political Economy. New York: MacMillan, 1934.
Cross, John. The Economics of Bargaining. New York: Basic Books, 1969.
Delaney, John and Susan Schwochau. “Employee Representation Through the Political Process.” In Bruce Kaufman and Morris Kleiner, eds. Employee Representation: Alternatives and Future Directions. Madison, Wisc: Industrial Relations Research Association, 1993, pp. 265–304.
Demsetz, Harold. “The Theory of the Firm Revisited.” In O. Williamson and S. Winter, eds. The Nature of the Firm. New York: Oxford University Press, pp. 159-78.
Devinatz, Victor. “The Fears of Resource Standardization and the Creation of an Adversarial Workplace Climate: The Struggle to Organize a Faculty Union at Illinois State University.” In David Lewin and Bruce Kaufman, eds. Advances in Industrial and Labor Relations, Vol. II. New York: Elsevier Science, 2002, pp. 145–80.
Dow, Gregory. “The New Institutional Economics and Employment Regulation.” In Bruce Kaufman, ed. Government Regulation of the Employment Relationship. Madison, Wisc: Industrial Relations Research Association, 1997, pp. 57–90.
Faith, Roger and Joseph Reid. “An Agency Theory of Unionism.” Journal of Economic Behavior and Organizationon 8 (No. 1, 1987): 39–60.
Farber, Henry. “The Determination of the Union Status of Workers.” Econometrica 51 (September 1983): 1417–38.
—. “Right-to-Work Laws and the Extent of Unionization.” Journal of Labor Economics 2 (July 1984): 319–52.
—. “The Analysis of Union Behavior.” In Orley Ashenfelter and Richard Layard, eds. Handbook of Labor Economics, Vol. 1. New York: North-Holland, 1986, pp. 1039–89.
— and Alan Krueger. “Union Membership in the United States: The Decline Continues.” In Bruce Kaufman and Morris Kleiner, eds. Employee Representation: Alternatives and Future Directions. Madison, Wisc: Industrial Relations Research Association, 1993, pp. 105–34.
Flanagan, Robert. “Workplace Public Goods and Union Organization.” Industrial Relations 22 (Spring 1983): 224–37.
—. “Can Political Models Predict Union Behavior?” In R.J. Flanagan, K.O. Moene, and M. Wallerstein, eds. Trade Union Behavior, Pay-Bargaining, and Economic Performance. Oxford: Oxford University Press, 1993, pp. 5–62.
Freeman, Richard. “Individual Mobility and Union Voice in the Labor Market.” American Economic Review 66 (May 1976): 361–8.
—. “Unionism and the Dispersion of Wages.” Industrial and Labor Relations Review 34 (October 1980a): 3–23.
—. “The Effect of Unionism on Worker Attachment to Firms.” Journal of Labor Research 1 (Spring 1980b): 229–62.
—. “The Effect of Unionism on Fringe Benefits.” Industrial and Labor Relations Review 34 (July 1981): 489–509.
Freeman, Richard and James Medoff. What Do Unions Do? N.Y.: Basic Books, 1984.
Freeman, Richard and Morris Kleiner. “Employer Behavior in the Face of Union Organizing Drives.” Industrial and Labor Relations Review 43 (April 1990): 351–65.
—. “Do Unions Make Enterprises Insolvent?” Industrial and Labor Relations Review 52 (July 1999): 510–27.
Freeman, Richard and Edward Lazear. “An Economic Analysis of Works Councils.” In Wolfgang Streeck and Joel Rogers, eds. Works Councils. Chicago: University of Chicago Press, 1995, pp. 27–52.
Freeman, Richard and Joel Rodgers. What Do Workers Want? Ithaca, N.Y.: ILR Press, 1999.
Friedman, Milton. “Some Comments on the Significance of Labor Unions for Economic Policy.” In David McCord Wright, ed. The Impact of the Union. New York: Harcourt, Brace, 1951, pp. 204–34.
Gallagher, Daniel and Cynthia Gramm. “Collective Bargaining and Strike Activity.” In David Lewin, Daniel Mitchell, and Mahmood Zaidi, eds. The Human Resource Management Handbook, Part II. Greenwich, Conn.: JAI Press, 1997, pp. 65–94.
Grout, Paul. “Investment and Wages in the Absence of Binding Contracts: A Nash Bargaining Approach.” Econometrica 52 (March 1984): 449–60.
Gunderson, Morley and A. Melino. “Estimating Strike Effects in a General Model of Prices and Quantities.” Journal of Labor Economics 5 (January 1987): 1–19.
Hicks, John. The Theory of Wages. New York: MacMillan, 1932.
Hirsch, Barry. Labor Unions and the Performance of Firms. Kalamazoo, Mich.: W.E. Upjohn Institute for Employment Research, 1991.
— and John Addison. The Economic Analysis of Unions. Boston: Allen and Unwin, 1986.
Hirschman, Albert. Exit, Voice, and Loyalty. Cambridge: Harvard University Press, 1970.
Johnson, George. “Organized Labor’s Political Agenda.” In Wei-Chiao Huang, ed. Organized Labor at the Crossroads. Kalamazoo, Mich.: W.E. Upjohn Institute for Employment Research, 1989, pp. 63–90.
—. “Work-Rules, Featherbedding, and Pareto-Optimal Union-Management Bargaining.” Journal of Labor Economics 8 (January 1990): S237–59.
Kaufman, Bruce. “Research on Strike Models and Outcomes in the 1980s: Accomplishments and Shortcomings.” In David Lewin, Olivia Mitchell, and Peter Sherer, eds. Research Frontiers in Industrial Relations and Human Resources. Madison, Wisc: Industrial Relations Research Association, 1992, pp. 77–130.
—. “Emotional Arousal as a Source of Bounded Rationality.” Journal of Economic Behavior and Organizationon 38 (February 1999): 135–44.
—. “Models of Union Wage Determination: What Have We Learned since Dunlop and Ross?” Industrial Relations 41 (January 2002): 110–58.
—. “The Organization of Economic Activity: Insights from the Institutional Theory of John R. Commons.” Journal of Economic Behavior and Organization 52 (September 2003): 71–96.
— and Jorge Martinez-Vasquez. “Voting for Wage Concessions: The Case of the 1982 GM-UAW Negotiations.” Industrial and Labor Relations Review 41 (January 1988): 183–94.
Kaufman, Bruce and David Levine. “An Economic Analysis of Employee Representation.” In Bruce Kaufman and Daphne Taras, eds. Nonunion Employee Representation: History, Contemporary Practice, and Policy. Armonk, N.Y.: M.E. Sharpe, 2000, pp. 149–75.
Kuhn, Peter. “Union Productivity Effects and Economic Efficiency.” Journal of Labor Research 6 (Summer 1985): 229–48.
Lawrence, Colin and Robert Lawrence. “Manufacturing Wage Dispersion: An End-Game Interpretation.” Brookings Papers on Economic Activity (No. 1, 1985): 47–106.
Levine, David. “Fairness, Markets, and Ability to Pay.” American Economic Review 83 (December 1993): 1241–59.
—. Reinventing the Workplace. Washington, D.C.: Brookings Institution, 1995.
Lewin, David. “Dispute Resolution in Nonunion Organizations: Key Empirical Findings.” In Samuel Estreicher, ed. Alternative Dispute Resolution in the Employment Arena. New York: Kluwer, 2004.
— and Karen Boroff. “The Role of Loyalty in Exit and Voice: A Conceptual and Empirical Analysis.” In David Lewin, Bruce Kaufman, and Donna Sockell, eds. Advances in Industrial and Labor Relations, Vol. 7. Greenwich, Conn.: JAI Press, 1996, pp. 69–96.
Maloney, Michael, Robert McCormick, and Robert Tollison. “Achieving Cartel Profits through Unionization.” Southern Economic Journal 46 (October 1979): 628–34.
Manning, Alan. Monopsony in Motion: Imperfect Competititon in Labor Markets. Princeton: Princeton University Press, 2003.
Manzini, Paola. “Game Theoretic Models of Wage Bargaining.” Journal of Economic Surveys 12 (February 1998): 1–41.
Miller, Gary. Managerial Dilemmas. New York: Cambridge University Press, 1991.
Mitchell, Daniel. Unions, Wages, and Inflation. Washington, D.C.: Brookings Institution, 1980.
Naylor, Robin. “Economic Models of Union Behavior.” In John Addison and Claus Schnabel, eds. The International Handbook of Trade Unions. Northampton, Mass.: Edward Elgar, 2003.
Neumark, David. “Declining Union Strength and Labor Cost Inflation in the 1980s.” Industrial Relations 32 (Spring 1993): 204–22.
Northrup, Herbert. “Construction Union Programs to Regain Jobs: Background and Overview.” Journal of Labor Research 18 (Winter 1997): 1–16.
Oswald, Andrew. “The Economic Theory of Trade Unions: An Introductory Survey.” Scandinavian Journal of Economics 87 (No. 2, 1985): 167–93.
—. “Efficient Contracts Are on the Labour Demand Curve: Theory and Facts.” Labour Economics 1 (1993): 85–113.
Pencavel, John. “The Demand for Union Services: An Exercise.” Industrial and Labor Relations Review 24 (January 1971): 180–90.
—. Labor Markets and Trade Unionism. Cambridge: Blackwell, 1991.
Reder, Melvin. Economics: The Culture of a Controversial Science. Chicago: University of Chicago Press, 1999.
Rees, Albert. “The Effects of Unions on Resource Allocation.” Journal of Law and Economics 6 (October 1963): 69–78.
—. The Economics of Trade Unions, 3rd ed. Chicago: University of Chicago Press, 1989.
Reynolds, Lloyd and Cynthia Taft. The Evolution of Wage Structure. New Haven, Conn.: Yale University Press, 1956.
Reynolds, Morgan. Power and Privilege: Labor Unions in America. New York: Universe Books, 1984.
Ross, Arthur. Trade Union Wage Policy. Berkeley: University of California Press, 1948.
Schwartz-Miller, Ann and Wayne Talley. “Technology and Labor Relations: Railroads and Ports.” Journal of Labor Research 23 (Fall 2002): 513–34.
Shister, Joseph. “The Theory of Union Wage Rigidity.” Quarterly Journal of Economics 57 (August 1943): 522–42.
Simon, Herbert. Models of Bounded Rationality, Vol. 2. Cambridge: MIT Press, 1982.
Taras, Daphne and Allen Ponak. “Mandatory Agency Shop Laws As an Explanation of Canada-US Union Density Divergence.” In James Bennett and Bruce Kaufman, eds. The Future of Private Sector Unionism in the United States. Armonk, N.Y.: M.E. Sharpe, 2002, pp. 260–91.
Ulman, Lloyd. “Marshall and Friedman on Union Strength.” Review of Economics and Statistics 37 (November 1955): 384–401.
Vedder, Richard and Lowell Galloway. “The Economic Effects of Labor Unions Revisited.” Journal of Labor Research 23 (Winter 2002): 41–50.
Vittoz, Victor. New Deal Labor Policy and the American Industrial Economy. Chapel Hill: University of North Carolina Press, 1987.
Williamson, Oliver. The Economic Institutions of Capitalism. New York: Free Press, 1985.
—, Michael Wachter, and J. Harris. “Understanding the Employment Relation: The Analysis of Idiosyncratic Exchange.” Bell Journal of Economics 6 (Spring 1975): 250–78.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Kaufman, B.E. What unions do: Insights from economic theory. J Labor Res 25, 351–382 (2004). https://doi.org/10.1007/s12122-004-1021-x
Issue Date:
DOI: https://doi.org/10.1007/s12122-004-1021-x