The Rise and Fall of Unions in the United States
58 Pages Posted: 8 May 2012 Last revised: 29 Aug 2016
Date Written: August 6, 2016
Union membership in the United States displayed a ∩-shaped pattern over the 20th century, while income inequality sketched a ∪. A model of unions is developed to analyze these facts. There is a distribution of productivity across firms in the economy. Firms hire capital, plus skilled and unskilled labor. Unionization is a costly process. A union chooses how many firms to organize and the union wage. Simulation of the model establishes that skill-biased technological change, which affects the productivity of skilled labor relative to unskilled labor, can potentially explain the observed paths for union membership and income inequality.
Keywords: Mass Production, Computer Age, Skill-Biased Technological Change, Income Inequality, Union Membership
JEL Classification: J51, J24, L23, L11, L16, O14, O33
Suggested Citation: Suggested Citation