Abstract
In this paper we compare two well‐known models of union bargaining: labour demand and efficient bargains. We use data on the British docks which belonged to the national Dock Labour Board, abolished in 1989. The docks industry is particularly well‐suited for a test of the competing models: in fact it had a long tradition of union bargaining on manning levels and, at the same time, it experienced a long‐run decline in employment. Also, jobless dockers were granted some form of unemployment compensation.The institutional features of the industry allow to test a strong version of the efficient bargain model, where the union equates the utility of those who work and those who do not. Our evidence supports the strong efficiency hypothesis: employment depends only on the opportunity cost of working. The secular decline in employment in the industry is explained mainly by technological progress, i.e. the introduction of containers.
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