Union Membership and Employment Dynamics: A Note

15 Pages Posted: 24 Sep 2010

See all articles by Marcus Dittrich

Marcus Dittrich

Deggendorf Institute of Technology; CESifo (Center for Economic Studies and Ifo Institute)

Beate Schirwitz

IFO Institute for Economic Research

Date Written: September 23, 2010

Abstract

We analyze union behavior in a model with membership dynamics and compare the labor market outcomes to static union models. Based on empirical findings we modify standard models and show that the well-known result that static models overstate distortions caused by unions only holds in the special case of firm-level wage setting. If, however, the union is big enough to determine employment for the whole sector, it rather depends on both the elasticity of labor demand and union’s time preference whether static frameworks overrate or even underrate unions’ distortions.

Keywords: unions, endogenous membership, bargaining centralization

JEL Classification: C61, J50, J51

Suggested Citation

Dittrich, Marcus and Schirwitz, Beate, Union Membership and Employment Dynamics: A Note (September 23, 2010). CESifo Working Paper Series No. 3173. Available at SSRN: https://ssrn.com/abstract=1681274

Marcus Dittrich (Contact Author)

Deggendorf Institute of Technology ( email )

Edlmairstraße 6 und 8
Deggendorf, Bavaria 94469
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Beate Schirwitz

IFO Institute for Economic Research ( email )

Dresden Branch
Einsteinstrasse 3
Dresden, 01069
Germany

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