A Political Economy Model of Workers Representation: The Case of Union Elections in Spain

Abstract

In this article we present a political economy model to analyse the effects of union elections. Union elections are the prerequisite for participating in collective bargaining and they are a unique Spanish institution for union recognition. We apply standard political economy assumptions to model the union elections in order to understand their influence on the dynamics of the unemployment rate. Although union elections give the right to vote to virtually all workers, we show that insider power exists and that it introduces a hysteresis effect on the unemployment rate. In addition, the model shows how the date of the union elections can amplify the business cycle. An empirical analysis confirms the main predictions of the model.