Agency costs, property rights, and the evolution of labor unions

Article Abstract:

Collective bargaining requires that an agent represent workers. This paper examines the implications for the trade union movement of the resulting agency costs. Without transferable rights in the union, union members lack the means and incentive to bring forth the innovative agent controls common to the modern corporation. Considerations of the bargaining strengths of employers and employees, each represented by an agent, provide an explanation of the simultaneous decline of private sector union membership (corporate share holders have been more successful at lowering agency costs) and growth of public sector union representation (where the union official, a "double agent," serves the interest of both employee and bureaucratic employer.) (Reprinted by permission of the publisher.)

Analysis, Finance, Collective bargaining, Labor movement

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An integrated model of the economic effects of Right-to-Work laws

Article Abstract:

This study derives an empirical model which simultaneously traces the effect of Right-to-Work laws on the worker's decision to join the union, the union's decision to set the wage rate, and the firm's decision to employ inputs. The model identifies two channels through which Right-to-Work laws affect these decisions: the wage effect and the productivity effect. Our results show that RTW laws tend to affect economic decisions through the wage effect, because the effect of RTW laws on productivity is small in most states. (Reprinted by permission of the publisher.)

Laws, regulations and rules, Labor law, Right to work (Labor unions), Right to work laws

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