The Dynamics of Power in Labor Markets: Monopolistic Unions Versus Monopsonistic Employers

69 Pages Posted: 14 Oct 2022

See all articles by Samuel Dodini

Samuel Dodini

Norwegian School of Economics (NHH)

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics; IZA Institute of Labor Economics

Alexander Willén

Norwegian School of Economics (NHH) - Department of Economics

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Abstract

This paper brings together the modern research on employer power and employee power by empirically examining the effects of unionization on worker earnings, employment, and inequality across differently concentrated markets. Exploiting national tax reforms to union membership dues as exogenous shocks to unionization, we show that high levels of unionization mitigate the negative wage and employment effects generated by imperfect competition. We also identify considerable effect heterogeneity with respect to worker types across differentially concentrated markets, and show that this has major implications for the role of unions in shaping labor market wage inequality.

Keywords: monopsony, skills, unions, market concentration

JEL Classification: J23, J24, J42, J51, J52, J63

Suggested Citation

Dodini, Samuel and Salvanes, Kjell G. and Willén, Alexander, The Dynamics of Power in Labor Markets: Monopolistic Unions Versus Monopsonistic Employers. IZA Discussion Paper No. 15635, Available at SSRN: https://ssrn.com/abstract=4247489 or http://dx.doi.org/10.2139/ssrn.4247489

Samuel Dodini (Contact Author)

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47 5 595 9315 (Phone)
+47 5 595 9543 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alexander Willén

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

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