Unions: rent creators or extractors?

Toke S. Aidt, Vania Sena

Research output: Contribution to journalArticlepeer-review

Abstract

This paper proposes a model of workplace-specific unions that integrates two views of what unions do. One view holds that unions mainly engage in rent extraction. Another view holds that unions mainly engage in rent creation by providing agency services that increase workplace productivity. We demonstrate that the choice between the two activities is systematically related to the economic and regulatory environment in which the union operates. Product market competition encourages rent creation, while labor market deregulation encourages rent extraction. Moreover, we provide a rationale for why firms may want to subsidize unions. © The editors of the Scandinavian Journal of Economics 2005.

Original languageEnglish
Pages (from-to)103-121
Number of pages19
JournalScandinavian Journal of Economics
Volume107
Issue number1
Early online date12 Apr 2005
DOIs
Publication statusPublished - May 2005

Keywords

  • extraction
  • product market competition
  • rent creation
  • unions

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