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A Biological Model of Unions
That's the title of a paper by Michael Kremer and Benjamin Olken. The bottom line is:
...a union that implements workers' preferences will not be evolutionarily stable.
The union that survives must either extract fewer rents for the workers (thus lowering anti-union expenditures from the employer, or helping keep the employer in business) or spend excess funds on organizing and bolstering union membership in the broader economy. A union that spends on membership and organizing drives tends to spread from one firm to the next. If a union were truly controlled by its members it would take lots of current rents with little concern for the longer-term future of the firm or for the longer-term future of the union.
Here's a neat paragraph:
The dynamics of unionization levels also bear a similarity to those under the Susceptible-Infected (SI) model of epidemiological dynamics...In that model, new potential hosts are born uninfected; the chance that they become infected increases with the number of hosts already infected; and once hosts are infected, they stay infected until they die. Note that this comparison is purely positive, not normative.
Yes the paper does offer some evidence but it is more interesting as a theory piece. Here is an earlier ungated version, there is also 2001 version listed at NBER and here is the current version.
Posted by Tyler Cowen on July 1, 2008 at 07:05 AM in Economics | Permalink
Comments
...and a republic that implements voters' preferences will not be evolutionarily stable either?
Posted by: at Jul 1, 2008 7:41:27 AM
No ,it wont .That why is a republic not a democracy
Posted by: k at Jul 1, 2008 8:47:49 AM
This may well be true for unions "as we know them". Company unions providing local public goods [safety vs. cash, eg.] seem to me to be efficiency enhancing. Japan is the best example. The constraint would have to be "company unions" only are allowed, and no company has to have a union. No unions for government workers, either. Let them deal with the HR department!
Posted by: Frank at Jul 1, 2008 10:37:44 AM
Note that this comparison is purely positive, not normative.
LOL. Oh to be a fly on the wall at the next union meeting in which this paper is discussed.
Posted by: Michael F. Martin at Jul 1, 2008 2:04:38 PM
Oh to be a fly on the wall at the next union meeting in which this paper is discussed.
I'll let you know how it goes unless I morph into a pariah.
Posted by: Mike Fladlien at Jul 1, 2008 3:00:01 PM
Union leaderships have to make a basic trade-off between maximizing the size of the union and maximizing benefits to current union members. For example, John L. Lewis's United Mine Workers intentionally drove up the wages of coal miners to levels that made massive automation inevitable. He stated that coal mining was a lousy job and wanted his members to make enough money to educate their kids to make a living aboveground. Today, there are very few, but rather well-paid coal miners.
In contrast, the SEIU largely exists to enroll as many members as possible, typically illegal immigrants. About once a decade, they win a much publicized strike in a single city (LA in the 1990s, Houston in the 2000s) boosting janitors' wages, but they mostly function as a politically correct mouthpiece for the cheap labor lobby, calling for more illegal immigrants. In contrast, Cesar Chavez's United Farm Workers flourished after the end of the bracero program in 1964, staging its first strike in 1965. Chavez was bitterly hostile to illegal immigrants, who were used as strikebreakers, sending his brother to lead UFW staffers as border vigilantes, beating up illegal immigrants.
Posted by: Steve Sailer at Jul 1, 2008 4:50:55 PM
Company unions providing local public goods [safety vs. cash, eg.] seem to me to be efficiency enhancing.
If company unions are efficiency enhancing, why aren't they ubiquitous? Even more obviously, wouldn't companies and HR depts find it optimal to provide these "local public goods" on their own and capture the surplus?
Posted by: guest at Jul 1, 2008 5:34:12 PM
This article begs the question of why there is a market for unions in the first place. Absent unions, or the threat of unions, management will abuse workers. This is so obvious I cannot understand why it is so often ignored.
The article talks about unions extracting rent from companies. Well, let's not forget that companies extract rent from employees when they deem it in their best interests, and often just because they can.
If you are a worker without a union, you have absolutely no leverage over your employer. The relationship, in terms of power, is one sided with management having the upper hand. Unions help balance out this equation.
Unions, at heart, are about power relationships; not about marginal advantages.
Posted by: lxm at Jul 2, 2008 7:34:34 PM
If company unions are efficiency enhancing, why aren't they ubiquitous?
I checked my Labor Economics textbook and according to Ehrenberg, most unions in the United States are company unions or locals.
Posted by: Mike Fladlien at Jul 3, 2008 3:02:00 PM
Does that make unionbusting of non-company unions an attempt at inoculation?
Posted by: sethstorm at Jul 4, 2008 6:27:07 PM
@lxm: The best way to fight abusing is to provide full employment in an economy.
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