WAGES AND EMPLOYMENT IN PUBLIC-SECTOR UNIONS

We model the politics of wage and employment determination for unionized public-sector workers who can strike. If the employment level affects the identity of the decisive voter in budget referenda and other elections, then unions may be able to increase wages by increasing employment. We identify conditions under which public sector unionization will lead to increased wages and employment; we also show that a majority of voters may favor unionization. (JEL 545, J51, H4)     

A simultaneous-equations model of the relationship between public sector bargaining legislation and unionization

This paper estimates a simultaneous-equations model with public sector bargaining laws and union membership treated as jointly-determined variables. The extent of public sector unionization has a significant positive influence on the passage of prolabor bargaining legislation and bargaining legislation has strong, independent effects on the extent of public sector unionization. We gratefully acknowledge the research support provided by Minbo Kim and Parisun Chantonahom.     

OLIGOPOLY CAPITALISM, LABOR ORGANIZATION, AND WAGES OF WORKERS IN AMERICAN MANUFACTURING INDUSTRIES

This article investigates the interaction between oligopoly power, labor unionization, and worker wages. Using data from the Panel Study of Income Dynamics for workers in manufacturing industries little evidence is found that workers are exploited by oligopolistic employers, but rather wages for production workers increase with both unionization and employer's market power. There is evidence, however, that unionization reduces variation in wages due to increased oligopoly power.     

Does labor contract completeness drive unionization? Experimental evidence

Flynn (2005) proposes that the degree to which labor contracts are complete may be a major driving force behind the propensity of employees to unionize. We find behavior consistent with this hypothesis in an experimental production game in which subjects are assigned to playing either employers or employees. The rate at which employees opt for a proxy for unionization more than triples when the labor-contracting regime under which they are working shifts from incomplete to complete labor contracts. Complete labor contracts drive out positive reciprocity, anger workers, and increase their desire to unionize.     

Male-female differences in the potential for union growth outside traditionally unionized industries

Using recent NLS data on preferences for union representation, this paper examines whether differences by sex exist in the potential for union organizing outside of traditionally unionized industries. The methodology distinguishes between workers’ preferences for union representation and the relative supply of union jobs in explaining interindustry differences in the extent of unionization. Within the private sector, women employed in industries other than those traditionally unionized are found to have at least as strong a preference for unionization as do comparable men but a considerably lower opportunity for unionized employment given the desire for union representation. Comparing the public sector with traditionally organized industries, the greater extent of unionization in the public sector is largely explained by a stronger desire for union representation on the part of both male and female public sector employees. The helpful comments of Rodney Fort, Daniel Hamermesh, Robert Hutchens, and Jon Sonstelie on an earlier draft of the paper are gratefully acknowledged.     

SECTORAL COMPOSITION OF GOVERNMENT SPENDING AND MACROECONOMIC (IN)STABILITY

This article examines the quantitative interrelations between sectoral composition of public spending and equilibrium (in)determinacy in a two‐sector real business cycle model with positive productive externalities in investment. When government purchases of consumption and investment goods are set as constant fractions of their respective sectoral output, we show that the public‐consumption share plays no role in the model's local dynamics, and that a sufficiently high public‐investment share can stabilize the economy against endogenous belief‐driven cyclical fluctuations. When each type of government spending is postulated as a constant proportion of the economy's total output, we find that there exists a trade‐off between public consumption versus investment expenditures to yield saddle‐path stability and equilibrium uniqueness. (JEL E32, E62, O41)     

The division of union rents

In this paper, a median voter model that recognizes the trade-off between higher wages and lower levels of employment is presented. It is argued that a seniority-based layoff rule creates the opportunity for mutually beneficial side-payments between older and younger workers. As a result, older workers reap more of the rents of unionization than do younger workers. The resulting distribution of union rents is found to be consistent with existing empirical evidence. We would like to thank Mike Baye and Gene Grossman for most useful comments on earlier versions of this paper. Any remaining errors, of course, are solely our responsibility.     

Fiscal austerity and public servant quality

In this article we use a simple model to analyze the forces that determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy which maximizes a utility function U(s, Y) that depends on the share of the labor force employed in public service s and private sector output Y. The government is fully informed about worker productivity. We characterize the behavior of the public sector, and explore the efficiency and employment consequences of imposing fiscal constraint on the government.     

Non-clearing labor markets and minority employment in municipal government

This paper posits a public choice model for explaining the variation across cities in the minority share of local government employment. The paper argues that, when hiring under conditions of excess supply, vote-maximizing local public employers exchange public sector jobs for political support from identifiable special interest groups. The model is tested for two local government occupations — police officer and firefighter — using a sample of cities above 50,000 in population. The results are compatible with the basic hypothesis that the greater the excess supply for an occupation, the higher the share of minority employment in that occupation. We are indebted to James D. Adams, Bernard Bernstein, Ali Rassuli, and Loren Solnick for helpful comments on an earlier draft. The authors alone are responsible for the contents of the paper.     

Delayed-payment contracts as a means of discouraging unionization

Delayed-payment, self-enforcing implicit contracts are a viable means of discouraging unionization. A contract which would be terminated if employees unionize would reduce the expected gains from unionization for employees, because the firm would not be required to make the delayed payment. These contracts thus reduce the likelihood of unionization and are equivalent to requiring employees to post performance bonds that are forfeited to the firm if the workers unionize. Such contracts would benefit workers as well as the firm, and thus be viable, if unionization would impose deadweight losses (most likely as a result of discouraging specialized investment) and the firm’s promises are credible. Delayed-payment contracts designed for other purposes, such as discouraging shirking, would also discourage unionization if unionization increased the likelihood that the contract would be terminated. I am grateful to the anonymous referee for helpful comments on two drafts of the paper, particularly the suggestion on organization.     

The impact of unionization on the entry of firms: Evidence from U.S. industries

Traditional models of entry-deterrence typically emphasize sunk costs or predatory pricing, but unionization might also discourage potential entrants. This paper explores this possibility through an empirical model of entry that includes unionization as an explanatory variable. We find that unionization has a statistically significant entry-deterring effect.     

Temporary Skilled Migration to Australia: Employers' Perspectives1

With the 1996 introduction of a new visa making it easier for employers to sponsor skilled foreign workers, temporary skilled migration has become a significant component of international migration flows to Australia. This paper examines employers' reasons for sponsoring skilled workers from abroad, their modes of recruitment, the occupational skills they require, and their industry profile. We also discuss issues relating to the perception of a shortage of skilled workers, the extent that sponsoring foreign workers substitutes for investing in local training, and the role of networks in recruiting overseas workers. Many employers' now have a global view of labour recruitment. While this is understandable for multinational companies with global operations, many small businesses and public sector institutions are adopting the same strategy to obtain skilled labour which they say is in short supply in Australia. With the internationalization of the Australian economy, there is also an increasing demand for people with specialized skills and knowledge that is not available in Australia's relatively small labour market. An understanding of the demand factors motivating temporary skilled migration is crucial to effectively managing Australia's migration and labour trends.     

The role of the health care sector in the U.S. economy

This Issue Brief discusses factors that contribute to the growth of health care expenditures and the reasons that many individuals, employers, and policymakers consider health expenditures too high. In addition, it describes various industries that make up the health care delivery system and their role in the U.S. economy as employers, producers, exporters, and suppliers of research and development. The report also discusses the economic implications of rising health care expenditures for individuals, employers, and the federal government and the potential impact of proposed health care reform on the health care sector and the U.S. economy as a whole. Health care delivery industries such as pharmaceuticals and medical equipment suppliers have higher than average research and development levels, in addition to a positive balance of trade. Moreover, while the total number of jobs in the private sector declined between 1990 and 1993, the number of jobs in the relatively high paid health services sector continued to grow. In aggregate, employer spending on health care represents only 6.6 percent of total labor costs. In comparison, wages and salaries represent 83 percent of total labor costs. Consequently, the growth rate of health care expenditures has a smaller impact on the growth rate of total compensation than does the growth rate in wages and salaries. Using job multipliers developed by the U.S. Department of Commerce, it is estimated that the 18,600 health care services jobs in Rochester, Minnesota in 1993 created another 32,000 jobs in the area. Any contraction of the health care sector in cities that have a large concentration of employment in health services would result in reduced employment in restaurants, retail stores, janitorial services, and other local businesses. EBRI's simulations estimated that between 200,000 and 1.2 million workers could become unemployed as a direct result of a mandate that employers provide health benefits to their employees, assuming that wages and salaries did not adjust at all. Others find that approximately 50,000 individuals would lost their jobs, assuming that wages and other labor costs adjust downward to completely account for increased costs. As is apparent, the estimates of job loss (and of the total costs of the policy) are extremely sensitive to the assumptions used in the simulation.     

Employers’ responses to the HIV epidemic in sub‐Saharan Africa: Revisiting the evidence

Do employers have a role to play to support people living with HIV? The literature on sub‐Saharan Africa points to the existence of a positive business case that sees firms as incentivized to provide HIV‐related services to HIV positive workers However, the evidence is narrow and incomplete, with the business case holding for a limited number of formal sector skilled workers, leaving out most people living with HIV. If employers are to play a role, policy‐makers need to create conducive conditions for positive responses, in addition to—not in replacement of—strengthening public healthcare systems.     

Do HRM practices influence the desire for unionization? Evidence across workers,workplaces, and co-workers for Great Britain

We investigate the desire of nonunion workers in Great Britain to become represented by unions. Comparing our results to those from the United States, we find that workers in Great Britain are less likely to desire unionization and express lower dissatisfaction with their influence at work. The determinants of the desire for unionization are estimated controlling for a wide variety of individual and workplace variables. The roles of human resource management and employee involvement are isolated. We identify direct work-place and worker-level effects of these practices in reducing the desire for unionization and an indirect effect operating through the influence of employee relations, a major determinant of the desire for unionization. Also, we identify characteristics of co-workers that are associated with desire for unionization and examine the role information revelation may play in managerial strategies to forestall unions.     

Phased Retirement for Older Workers in Taiwan

Working part-time has become a popular option during transition from a full-time career job to full retirement among older workers all over the world. Five waves of The Survey of Health and Living Status of the Elderly in Taiwan, from 1989 to 2003, are used to study older workers?? part-time work behaviors. The data confirm that more than 20% of full-time older workers with at least 10?years of job tenure do not fully retire from their career jobs. Moreover, there exists a significant proportion of older workers who stay with their career jobs and work part-time. We found that due to pension regulations, public sector employees are less likely to stay with their long-term employers and use phased retirement options.     

BEYOND EDUCATION AND FAIRNESS: A LABOR MARKET TAXATION MODEL FOR THE GREAT GATSBY CURVE

Applied researchers have been drawn to models that attribute the demonstrated cross‐country differences in intergenerational income transmission to government failures to invest in the human capital of poor children. To highlight another potential mechanism, the disincentive effects of labor market taxation and redistribution, we present a simple model that can explain cross‐country differences in intergenerational mobility and other previously observed empirical patterns. Empirical tests using data on income mobility, tax rates, and public expenditures largely support the model predictions. We conclude that the common presumption that intergenerational mobility largely measures fairness or opportunity, and the resultant policy recommendations, are premature. (JEL D31, J24, J62)     

Culture, Capital and Class Conflicts in the Political Economy of Cape Breton

Abstract This paper examines the unprecedented rapid unionization of fish processing plant workers in the industrial town of Glace Bay, Cape Breton. The explanation for union militancy is tied to historical dynamics in local labour markets and the transposition of working class consciousness from the mining sector to the fish processing sector. Historically forged household and community dynamics and cultural values provide the key to the mobilization of the Cape Breton fish plant workers. While the contradictory and complex nature of local culture allowed for the emergence of resistance, the conditions which inspired such action also nurtured social patterns well accommodated to the region's marginal economic conditions. Thus, the circumstances under which strategies for resistance are forthcoming must hold particular and locally meaningful cultural significance. Paternalistic control of the labour force in local fish plants successfully manipulated local cultural values. Impersonal corporate management strategies violated these codes of conduct and provoked rapid collective response.     

Capacity and Solidarity: Foundational Elements in the Unionization Strategy for Immigrant Day Labourers

Recent scholarship has been reasonably optimistic about unionization as a mechanism of labour justice for immigrant workers in casual and contingent work. This optimism rests on two assumptions: (1) that unions have the capacity to absorb immigrant workers in nonstandard work and (2) that casual, immigrant labourers enjoy the kind of solidarity that underpins collective action. This paper examines these assumptions critically through a case study of construction unions and Latino immigrant day labourers in Denver, Colorado and Baltimore, Maryland. I use participant observation and in‐depth interviews with nine labour unions, 19 Latino immigrant day labourers, and two (non‐union) day labour organizing projects in the cities to examine questions of capacity and solidarity. I find that the existing foundations for unionizing day labourers may be weak in certain cities and communities. Union capacity is undermined by structural fragmentation and specialization in market segments that are inaccessible to day labourers. Strategically, in an age of de‐unionization, unions also face pressures to “add value” for employers by sorting the workforce into high quality and low quality categories. Locals indicate day labourers would likely fall into the latter category, thus precluding membership. The foundations for solidarity are similarly weakened in the cases studied. Culturally, day labourers in Denver and Baltimore emphasize self‐reliance and material well‐being over collective action and the pursuit of justice. To work toward unionization, organizers should be prepared to confront deficits of capacity and solidarity in other cities as well, especially those where homelessness is prevalent among day labourers, where immigrant populations are newly arrived, or where local union cultures are unreformed. I suggest that union collaboration, a cooperative type of occupational unionism, and commitments to training day labourers may help boost union capacity to absorb day labourers, while the creative use of material incentives should figure prominently in organizing strategies.     

DO EMPLOYERS PAY FOR CONSISTENT PERFORMANCE?: EVIDENCE FROM THE NBA

In a world of uncertainty in which a worker's performance is variable over time and average performance is unknown when hiring, how will employers determine compensation? We develop a monitoring and signaling model where information is symmetric and parties are risk neutral. Monitoring costs increase with inconsistency, lowering pay for inconsistent workers. If discrimination exists, minority workers will be rewarded less than majority workers for improving consistency. Testing these and other predictions using National Basketball Association data, we find that consistent professional basketball players are paid more, but, in contrast to previous studies, there is no evidence of discrimination. (JEL J3, J7)