The Rise and Fall of Unions in the U.S.
62 Pages Posted: 3 Jul 2012 Last revised: 13 Jun 2013
Date Written: June 1, 2013
Union membership in U.S. displayed a ∩-shaped pattern over the 20th century, while in- come inequality sketched a ∪. A model of unions is developed to analyze this phenomenon. 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 above facts. Statistical analysis suggests that skill-biased technological change is an important factor in deunionization.
Keywords: Distribution of Income, Flexible Manufacturing, Income Inequality, Mass Production, Numerically Controlled Machines, Relative Price of New Equipment, Skill-Biased Technological Change, Simulation Analysis, Union Coverage, Union Membership, De-unionization
JEL Classification: J51, J24, L23, L11, L16, O14, O33
Suggested Citation: Suggested Citation