Labor Unions, Bargaining & Discrimination: Analyzing Membership, Laws & Economic Impact, Slides of Economics

Download Labor Unions, Bargaining & Discrimination: Analyzing Membership, Laws & Economic Impact and more Slides Economics in PDF only on Docsity! Labor Unions, Collective Bargaining, and Discrimination Docsity.com Why Unions? Docsity.com Public Private Union Membership by Public Sector Status, 2008 10 20 30 Percent Union Membership 40 Docsity.com Union Membership by Demographic Group, 2008 25 and Over Under 25 Black White Female Male 0 5 10 15 Percent Union Membership ® Docsity.com Unionization by State 10.0 25.9 9.7 6.1 17.0 7.2 10.0 8.0 7.2 9.5 9.3 7.7 5.9 7.2 6.0 14.0 7.3 6.8 6.5 5.8 4.2 4.1 5.2 23.8 16.9 14.7 21.0 13.1 8.6 11.5 16.8 16.1 20.4 17.2 11.9 13.0 15.5 11.2 15.5 14.7 25.4 13.5 12.2 11.4 12.9 11.3 14.8 21.6 16.0 15.3 16.5 CT MA MD NJ RI Docsity.com Unionism’s Decline • Change in labor laws • Structural Hypothesis – Shift to services – Globalization – Shift to sunbelt – Smaller firms – Demographics: women, young – Part-time work • Managerial Opposition Hypothesis – Reagan and PATCO • Substitution Hypothesis – Growth of gov’t provided benefits Docsity.com Models of Union Behavior • Competitive market: W0, L0 • Economic models: – Maximizers • Wage rates? • Employment? • Wage bill? – Monopoly union – Efficient contracts L0 W0 Lu Wu D S Labor I1 π1 I2 Docsity.com Strategies to Raise Union Wages • Increase Labor Demand – Increase product demand – Increase worker productivity – Increase price of substitutes – Increase number of employers • Decrease Labor Supply – Decrease immigration – Decrease entry into occupation – Increase nonwage income Tariffs on foreign goods Minimum wage/Davis-Bacon Domestic content laws Apprenticeships/Licensing Social Security benefits Docsity.com Union Wage Advantage Pure wage advantage = (Wu – Wn)/Wn Docsity.com Union Wage Advantage • Spillover effect: laid-off union workers spill over into non-union sector • Threat effect: non-union firms pay higher wages (WT) to deter union • Product market effect: shift consumer demand to non-union markets • Wait unemployment effect: mitigates spillover effect • Superior worker effect: firms hire better workers • CWD effect: unions jobs have fewer amenities D SN SU WU W N D SN Sspill W S WT LU LS LN LN Union sector Non-Union sector Docsity.com Union Wage Advantage nn | Percent Union Wage Differential 0 PA A IIA A AAA AA Af 31.1 1983 1987 1991 1995 1999 2003 2007 ® Docsity.com Distribution of Earnings • Increasing inequality – Spillover effect lowers non-union wages – Increase wages of skilled blue-collar workers relative to unskilled blue-collar workers • Decrease inequality – Equalize wages within firms – Equalize wages across firms – Reduce the white-collar/blue-collar differential Empirical evidence is that unions reduce earnings inequality on net Docsity.com Macroeconomic Effects • Inflation – Unions are not a cause of inflation • Unemployment – Unions may reduce downward wage flexibility  increases unemployment – Reduce worker turnover  decreases unemployment – High union wages may increase unemployment by attracting new entrants Empirical evidence is that unions have only a small effect on unemployment Docsity.com Demographic Differences in Labor Market Outcomes * Gender e Race ® Docsity.com 0% 5% 10% 15% 20% 25% 1975 1980 1985 1990 1995 2000 2005 2010 White Male White Female Black Male Black Female Unemployment Rates Docsity.com Earnings by Education, Race, and Sex, 2007 $90,000 $80,000 4 $70,000 4 $60,000 4 $50,000 4 $40,000 4 $30,000 4 $20,000 4 $10,000 + White Male -®White Female -®Black Male -®Black Female Annual Earnings ® Docsity.com Occupational Distribution by Gender, 2008 Construction Inspectors Taxicab Drivers Dentists Physicians and Surgeons Janitors and Cleaners Laundry Workers Waiters and Waitressess Elementary School Teachers Registered Nurses Secretaries 0 20 40 60 80 100 Percent Female Docsity.com Labor Market Discrimination • Wage discrimination • Employment discrimination • Occupational discrimination • Human Capital discrimination Docsity.com Taste for Discrimination Model • Gary Becker (1957) • Society is willing to forgo output and profit to engage in discrimination – Employers – Employees – Customers • Discrimination coefficient: d = psychic costs – Hiring Rule: MRP = W – Assume: MRPw = MRPb – Prejudiced employer will be indifferent if: Ww = Wb + d University of Chicago 1992 No el Prize in Economics Implies that: Wb < Ww Ex: Ww = $10 and d = 3  Wb = $7 Docsity.com Taste for Discrimination Model • A decrease in discrimination will lengthen the horizontal portion of the demand curve and reduce the slope of the downward sloping portion. • The size of the black-wage gap varies directly with the supply of black labor. Sb Db Number of Black Workers L1 Wb/Ww 1.00 0.80 Non-discriminators The demand for black workers is formed by arraying employers from lowest to highest discrimination coefficients. Competitive markets should force discriminators to go bankrupt Docsity.com