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Conference Proceedings (1996), Eighth EALE Annual Conference, KEPE (Centre of Planning and Economic Research), pp. 1-20

Union Membership, Real Wage Stickiness and Unemployment

BESANCENOT D., VRANCEANU Radu

In this paper we examine the emergence of trade unions in a hypothetical economy hosting strictly rational workers. The basic tool is a no-tradeoff condition : organized workers may claim a wage premium equal to a share of the profit loss of the firm in the event of a strike. The representative worker seeks to maximize his expected income. It is shown that, for stable institutional settings and constant union activism, an optimal membership rate emerges, as well as a wage premium. In the long run, union leadership is free to set militancy at a level consistent with thespecific objectives , should it be membership building, this may entail full unionization.

BESANCENOT, D. and VRANCEANU, R. (1996). Union Membership, Real Wage Stickiness and Unemployment. In: Eighth EALE Annual Conference. KEPE (Centre of Planning and Economic Research), pp. 1-20.