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- W1587007349 abstract "Edward Lazear (1983) presents a model in which the number of unionized workers in an industry is endogenously determined by the utility-maximizing workers themselves. Hence in his model union firms and nonunion firms coexist. He assumes that the nonunion wage adjusts so that the labor market clears and full employment prevails. The purpose of this note is to examine the possibility of unemployment in Lazear's model. Of all the possible rigidities in the labor market that could lead to unemployment, the most natural one is the existence of minimum wage legislation.' It will be shown that the imposition of a minimum wage may induce the formation of a union. Furthermore, an increase in the minimum wage will result in a higher union wage, but decrease aggregate wage income. Finally, I investigate the influence of the elasticity of demand for labor on some indicators of union power. Henceforth it will be assumed that firms cannot pay a wage below some specified level W. This entails some modification of Lazear's model which is now briefly presented. The variables W, and WN are the union wage and the nonunion wage, respectively. Ci is the cost to firm i of blocking unionization of its workforce with Ci g(Ci) and G(C) the probability that firm i's blocking cost does not exceed C; apart from this disparity in blocking costs, all firms are identical. d(W) is the demand for labor by a firm faced with wage W and 11(W) is its profit outside of blocking costs. Define I *(W,, WN) --H1(WN)-11 (WU,) and firm i will block unionization when 1 *(W,, WN) > Ci, hence the probability that a firm will block is G[11*(Wi,, WN)]. The nunber of firms is S and R is the number of workers. The labor market equilibrium condition (1) of Lazear must be modified as" @default.
- W1587007349 created "2016-06-24" @default.
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- W1587007349 date "1985-01-01" @default.
- W1587007349 modified "2023-09-23" @default.
- W1587007349 title "Monopoly Unionism: Note" @default.
- W1587007349 hasPublicationYear "1985" @default.
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