Labor Law, Economics Of

Kenneth G. Dau-Schmidt & Jesulon Gibbs

Historically, nations have pursued a variety of purposes in regulating unions and collective bargaining. These purposes include increasing efficiency and promoting economic growth; promoting equity in bargaining power between management and labor; redistributing wealth from employers to employees; promoting the workers' collective voice, industrial democracy, and pluralistic national democracy; and minimizing industrial strife in the conduct of collective bargaining. These efforts seem fundamentally misguided under the traditional economic model of unions and collective bargaining. The traditional analysis holds that the source of union wage increases is a labor monopoly, which causes inefficiency and inequity by raising unionized workers' wages above the competitive level at the expense of displaced workers, who lose their jobs, and consumers, who pay higher prices. Monopoly theorists also traditionally characterize unions as brutal and undemocratic. However, the traditional analysis is logically and empirically flawed in that it ignores other more likely sources of union wage increases, ...

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