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Trade Unions

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The New Palgrave Dictionary of Economics
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When they formulated their classic definition of a trade union, Sidney and Beatrice Webb had in view the long struggle of groups of English workers to maintain associations that could stand up to employers and gain acceptance by the community. ‘A trade union,’ they said, ‘is a continuous association of wage earners for the purpose of maintaining or improving the conditions of their working lives’ (1894, p. 1). An economist starting from the assumption of the ultimate rationality of decisions is likely to see the trade union as a cartel or monopoly intended to maximize the benefits of its members. An intermediate view recognizes that men and women join trade unions for reasons that arise out of imperfections of the labour market. Because of the slow response of employment to lower labour cost, the job seekers in any one district will be confronted at a given time with a limited number of jobs: if then they exceed that number, even by one, and compete with each other by underbidding, the wage can be brought down to a limit set by bare subsistence or the level of support in unemployment.

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Brown, H.P. (2018). Trade Unions. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London.

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