Union Model Research Articles

Dynamic modelling of trade union behaviour: Evidence from the Greek manufacturing sector

The first part of the paper considers a behavioural model of trade unionism. Wages and employment are characterized as the outcome of a process by which the union maximizes an objective function containing wages and employment as arguments, and is constrained by a trade-off between these two variables as represented by the firm's labour demand function. In the second part, we apply the testing methodology developed by Johansen [Johansen, S., 1992a. A representation of vector autoregressive processes integrated of order 2, Econometric Theory 8, 188–202; Johansen, S., 1995a. A statistical analysis of cointegration for I(2) variables, Econometric Theory 11, 25–29; Johansen, S., 1997. A likelihood analysis of the I(2) models. Scandinavian Journal of Statistics 24, 433–462.] and extended by Paruolo [Paruolo, P., 1996. On the determination of integration indices in I(2) systems. Journal of Econometrics, 72 313–356.] and Rahbeck et al. [Rahbeck, A., Kongsted, H.C., Jorgensen, C., 1999. Trend stationarity in the I(2) cointegration model. Journal of Econometrics 90, 265–289.] for the presence of I(2) components in a multivariate context along with the estimation of the roots of the companion matrix [Juselius, K., 1995. Do purchasing power parity and uncovered interest rate parity hold in the long run? An example of likelihood inference in a multivariate time-series model. Journal of Econometrics 69, 211–240.]. Furthermore, structural restrictions identifying the long-run relations of interest are specified as proposed by Johansen and Juselius [Johansen, S., Juselius, K. 1994. Identification of the long-run and the short-run structure: An application to the ISLM model, Journal of Econometrics, 63, 7–36.] and Johansen [Johansen, S., 1995b. Identifying restrictions of linear equations. Journal of Econometrics 69, 111–132.] since more than one cointegrating vector is found. Applying the Hansen and Johansen [Hansen, H., and Johansen, S., 1993. Recursive estimation in cointegrated VAR-models. Working Paper, Institute of Mathematical Statistics, University of Copenhagen., Hansen, H., Johansen, S., 1999. Some tests for parameter constancy in cointegrated VAR-models. Econometrics Journal, 2, 306–333.] stability tests we show that the rank of the cointegration space is sample independent while the estimated coefficients do not exhibit instability in recursive estimation. Finally, an error correction model is estimated in order to disentangle the short-run from the long-run behaviour.

Biodiversity, ownership, and indigenous knowledge: Exploring legal frameworks for community, farmers, and intellectual property rights in Africa

Drafted between 1996 and 2000, the African Union's Model Legislation for the Protection of Indigenous Knowledge, attempts to redress the contradictory obligations of the international instruments affecting biodiversity, namely the Trade Related Intellectual Property Rights Agreement and the Convention on Biological Diversity, by establishing a new philosophical justification for farmers', breeders', and community rights. By approaching the question of property rights and farmers' rights from the perspective of the community, the African Model Law is able to establish a legal framework for access to biodiversity, benefit sharing, and intellectual property that satisfies the needs and requirements of African states by balancing the monopoly rights of breeders against the rights of indigenous communities.

Long-Run Economic Performance and the Labor Market

1. IntroductionThis article studies growth when the economy is not using all its productive resources to establish a bridge among two subdisciplines in economics: growth theory and unemployment theory. The former is dynamic and considers the impact on output of the growth in inputs under the assumption that unemployment is nonexistent. The latter is static and considers the determination of the rate of unemployment under the assumption that the growth of capital is nonexistent. Our goal herein is twofold. On one hand, we want to modify slightly the growth models to include the effects of persistent unemployment on long-run growth. On the other, we want to analyze the role played by the accumulation of capital in determining the unemployment rate.The underlying assumption in the neoclassical growth model is that, even if we admit sticky wages in the short run, in the long run, the labor market should have time to clear and the economy should return to full employment, understood as the level of employment compatible with frictional unemployment. Therefore, what is relevant when talking about growth is the growth of the labor force, not the growth of the employed labor force. However, if the equilibrium employment level in the labor market persistently differs from the more desirable frictional level, it is conceivable that this persistent deviation will have an impact on long-run growth. The average U.S. unemployment rate during the 1990s was 5.8% while countries such as France and Spain maintained double-digit unemployment rates in the 1980s and 1990s. It seems intuitive that double-digit unemployment during two decades should have long-lasting effects on standards of living. The disparate experiences of some European countries as opposed to the United States in terms of employment rates are due to very different institutional factors in the corresponding labor markets. This article studies the impact of labor market institutional variables on long-run growth.Despite a very large literature on both growth and unemployment, few papers have jointly studied these two phenomena. The exceptions are Furuya (1998) and Daveri and Tabellini (2000). Daveri and Tabellini study the implications of an increase in labor taxes on both unemployment and economic growth. The models in these two papers are of the overlapping generation class, but whereas in Furuya's, the labor market does not clear because of the existence of efficiency wages, in Daveri and Tabellini's, the labor market does not clear because of the existence of a union. Our model is a simple variation of the standard Solow model suitable for a first approximation to an empirical investigation of the interrelationship between economic growth and the labor market.We use a variation of Blanchflower and Oswald's (1995) wage curve, which is more suitable for integration with a growth model. The wage curve shows an empirical inverse relation between unemployment and wage levels. This inverse relation is consistent with models of noncompetitive wage determination. Basically, we use a reduced form of the open-trade-union Layard-Nickell (Layard and Nickell 1985, 1986) model of wage determination to explain why the equilibrium unemployment level differs from the frictional level. A weakness of relying on trade union behavior to explain unemployment is that, in most countries, not all workers are unionized. Union membership varies greatly across countries, but in most countries, a large part of the labor force is nonunionized. However, Blanchard and Summers (1986) argue that the trade union model can be interpreted as describing the behavior of a group of workers that acts as a group even if there is no formal trade union. The fact that both capital intensity and productivity affect the equilibrium unemployment rate is implicit in the Layard-Nickell model. We emphasize the importance of capital intensity in the determination of unemployment and incorporate unemployment into a growth model. …

Building reciprocal community unionism in the UK

British trade union renewal has focused on the twin strategies of organising and partnership. Drawing on experience from North America, and fledgling developments in Britain, this paper argues that reciprocal community unionism could provide another weapon in the union movement's armoury for reversing decline. The paper provides a brief historical overview of the intersection between unions and community in Britain before addressing reciprocal community unionism in more detail. The final part of the paper then looks at the work of Battersea and Wandsworth Trade Union Council's Organising Centre in South West London during 2000 and 2001. The case study highlights the ways in which trade unionism can develop when focused on a particular locality, and the advantages of having extra-workplace organisation in any place. The case also illustrates some of the barriers preventing this model of trade unionism being translated to other boroughs, towns and cities in the UK. In the conclusion, the paper then calls for further experimentation in the development of reciprocal community unionism.

Optimal Central Bank Conservatism and Monopoly Trade Unions

The "conservative central banker" has come under attack recently. Explicitly modeling the interaction of a trade union with monetary policy, it has been argued that the standard solution to the inflationary bias in monetary policy might actually be welfare reducing if the trade union has an exogenously given preference against inflation. We reframe this discussion in a standard trade union model. We show that the case against the conservative central banker rests exclusively on the assumption of a strictly nominal outside option (for instance, unemployment benefits) for the union. There is no welfare gain associated with making the central bank less conservative than society, however if the outside option is in real terms. As the nominal components of the trade union's outside option are mainly public transfers, we also show that the conservative central banker is always optimal if the government can choose the level of unemployment benefits as well as the degree of central bank conservatism.

The Organizing Model and the Management of Change

Trade unions in nearly all developed countries are facing major difficulties in maintaining membership levels and political influence. The U.S. labour movement has been increasingly attracted to an organizing model of trade unionism and, in turn, this response has caught the imagination of some sections of other Anglo-Saxon movements, most notably in Australia, New Zealand and Britain. Despite similarities in the problems that national union movements face, however, the histories and current experiences of trade unions in the various countries show marked differences. This article, based on extensive fieldwork in Britain and Australia, examines attempts to assess the importance of national contexts in the adoption of the organizing model through a comparative study of an Australian and a British union.

Labour Taxation and Employment in Trade Union Models: A Partial Survey

This paper uses a union bargaining framework, where the wage rate is negotiated between the representatives of employees and employers and firms unilaterally determine employment, to discuss the relationship between labour taxation and employment. In imperfectly competitive labour markets higher labour taxes - income and payroll taxes - will increase labour costs and have negative effects on employment. Tax progression tends to moderate wages and boost employment. Moreover, if labour tax bases are unequal due to tax exemptions, the structure of labour taxation matters so that the tax wedge may not be a sufficient statistic to describe the channel of influence of labour taxation. Finally, distortionary effects of labour taxes in more corporatist economies should be smaller than in economies with more decentralised wage bargaining. Empirical evidence - though not always very strong - supports these notions.

Duration dependent unemployment benefits in trade union theory

The basic trade union model is generalized to allow for an unemployment benefit system consisting of two benefit levels, one for short-term and one for long-term unemployed, and a rule determining whether an unemployed is short- or long-term. Under relatively mild conditions we show that benefit systems with no or positive duration dependence are dominated by a system with negative duration dependence in the sense that all union members achieve higher utility, unemployment is lower, and benefit expenditures are smaller.

Optimal Central Bank Conservatism and Monopoly Trade Unions

OPTIMThe “conservative central banker” has come under attack recently. Explicitly modeling the interaction of a trade union with monetary policy, it has been argued that the standard solution to the inflationary bias in monetary policy might actually be welfare reducing if the trade union has an exogenously given preference against inflation. We reframe this discussion in a standard trade union model. We show that the case against the conservative central banker rests exclusively on the assumption of a strictly nominal outside option (for instance, unemployment benefits) for the union. There is no welfare gain associated with making the central bank less conservative than society, however if the outside option is in real terms. As the nominal components of the trade union’s outside option are mainly public transfers, we also show that the conservative central banker is always optimal if the government can choose the level of unemployment benefits as well as the degree of central bank conservatism.

Optimal Central Bank Conservatism and Monopoly Trade Unions

The central has come under attack recently. On the basis of models in which there is explicit interaction between trade union behavior and monetary policy, it has been argued that if 'trade unions' are averse to inflation, welfare will be lower with a conservative than with a liberal central bank. We reframe this discussion in a standard trade union model. We show that the case against the conservative central banker rests exclusively on the assumption of a strictly nominal outside option (for instance, unemployment benefits) for the union. There is no welfare gain associated with making the central bank less conservative than society, however, if the outside option is in real terms. As the nominal components of the trade union's outside option are mainly public transfers, we also show that the conservative central banker is always optimal if the government can choose the level of nominal unemployment benefits as well as the degree of central bank conservatism.

Working Time: Theory and Policy Implications

Brief history of working time theory basic facts working time policy - an overview the standard neoclassical view of the labour market working time, production and cost functions working time in a cost minimization problem cost minimization, heterogenous workers and asymmetric information premium pay for overtime working time in a profit maximization framework working time in a trade union model complementary labour services and working time regulation working time reduction in a vertically integrated two-sector model working hours and unemployment in a matching model deregulation of working time premium and employment dynamics.

Optimal Central Bank Conservatism and Monopoly Trade Unions

The central has come under attack recently. Explicitly modeling the interaction of a trade union with monetary policy, it has been argued that the standard solution to the inflationary bias in monetary policy might actually be welfare reducing if the trade union has an exogenously given preference against inflation. We reframe this discussion in a standard trade union model. We show that the case against the conservative central banker rests exclusively on the assumption of a strictly nominal outside option (for instance, unemployment benefits) for the union. There is no welfare gain associated with making the central bank less conservative than society, however if the outside option is in real terms. As the nominal components of the trade union's outside option are mainly public transfers, we also show that the conservative central banker is always optimal if the government can choose the level of unemployment benefits as well as the degree of central bank conservatism.

A trade union model with endogenous militancy: interpreting the French case

This paper aims to provide a simple trade union model which highlights some of the distinctive institutional features of French unionism. The model focuses on the determinants of militancy and membership in a frictionless economy. It brings into the picture three types of agents and their specific behaviour: firms accept to pay a premium in order to avoid strikes, individuals participate in the union in order to maximise their expected income and union leadership seeks to maximise his/her net personal gain. By adapting militancy—broadly defined as hard stance during the annual wage bargaining—the union leader may achieve a unionisation rate consistent with his/her own objectives. It is shown that a non-Walrasian labour market equilibrium exists wherein real wages, employment, union size and militancy are jointly determined. In comparative statics, the model predicts a negative relationship between militancy and membership; recent evolutions of the main French union confederations tend to support this conclusion.

The Unemployment and Wage Effects of Shifting to an Indirect Tax in an Efficiency Wage Model

This paper examines the unemployment and wage effects of the tax shift from an income tax to a consumption tax in a shirking‐type efficiency wage model. It is found that the results of the ex‐ante individual income‐neutral and aggregate revenue‐neutral proposals in this paper's efficiency wage model confirm those in the monopoly trade union model analyzed by Sampson (1986), Creedy and McDonald (1990, 1992), and Pemberton (1992). The ex‐post tax‐shifting schemes are also discussed.

Open Economies, Insider Power and International Migration

In this paper we incorporate the possibility of international migration of Labour (IML) into a model of open economy with a non-competitive labour market. Migration flows in our model are endogenously determined by labour market performance. Our approach to the specification of the labour market is based on a trade union model where employed workers can exercise insider power. The model we develop allows for a simultaneous determination of union membership and real wages under conditions of migration outflows. In this framework, we show that migration outflows, lead to a real consumer wage higher than what would have been in the absence of migration. We also show that an increase in the rest-of-the-world wage or a decrease in the average migration cost will lead to higher real consumer wages at home. On the other hand, an increase in the real exchange rate will increase the home real product wage, however, the sign of change in the home real consumer wage is ambiguous. Finally, an improvement in the firm’s product market will raise both the domestic real consumer wage and the employment level.

Efficiency wages, trade unions, and employment

This paper integrates union bargaining into an efficiency model with imperfect monitoring of worker performance. The model is used to examine the effects of an increase in the benefit replacement ratio on wages, employment, and effort. It is shown that, in contrast to both standard shirking and trade union models, these effects are all ambiguous. In particular, if unions have some bargaining strength, a higher replacement ratio may reduce wages and increase employment. Whenever employment is increased the level of effort falls. Copyright 1998 by Royal Economic Society.

An open shop trade union model of wages, effort and membership

This paper develops a micro theoretic model which simultaneously explains wages, observable effort and union membership in an open shop framework. Unlike existing models of wages and effort or of wages and membership, the model can simultaneously explain changes in labour productivity and union density. The model predicts that a reduction in the effectiveness with which unions protect their members against dismissal for reasons other than redundancy simultaneously raises labour productivity and reduces union density. Lower union bargaining power, increased product market competition and higher unemployment are predicted to reduce density. Increased risk aversion raises predicted productivity and density.

Rebalancing Unemployment Benefits in a Unionized Labor Market

The basic trade union model is extended to allow for a more sophisticated unemployment benefit system consisting of two benefit levels, one for short-term and one for long-term unemployed, and a rule determining whether an unemployed is short- or long-term. The purpose of this extension is twofold: to get a more realistic analysis of the actual benefit systems in most countries and to analyze alternative reforms to the traditional one of changing a uniform benefit level. Reforms that rebalance the benefit rates holding constant either expected utility of an unemployed, aggregate benefit expenditures, or aggregate utility of union members can reduce unemployment.

How Robust Is the Microeconomic Theory of the Trade Union?

This article argues that the predictions of standard trade union models and the tests for distinguishing between these models are not robust to quite small and reasonable changes in the conventional assumptions. In particular, it considers the effect of assuming that the ex post substitutability between labor and capital is less than the ex ante substitutability. The paper shows that much of the conventional wisdom about the effects of trade unions is not necessarily true in this framework.

Testing a Model of Trade Union Behaviour: An Application of a Multivariate Cointegration Analysis to UK Aggregate Wage Data

ABSTRACT The first part of the paper considers a behavioural model of trade unionism. Wages and employment are characterized as the outcome of a process by which the union maximizes an objective function containing wages and employment as arguments, and is constrained by a trade-off between these two variables as represented by the firm's labour demand function. In the second part, the model's equilibrium predictions for wages are estimated in the framework of a multivariate error correction model and tested for cointegration with data from Britain's manufacturing sector from 1967 to 1986.