The labor market effects of trade union heterogeneity

Abstract

Empirical evidence suggests that the bargaining power of trade unions differs across firms and sectors. Standard models of unionization ignore this pattern by assuming a uniform bargaining strength. In this paper, we incorporate union heterogeneity into a Melitz ( 2003) type model. Union bargaining power is assumed to be firm-specific and varies with firm productivity. This framework allows us to re-analyze the labor market effects of (i) a symmetric increase in the bargaining power of all unions and (ii) trade liberalization. We show that union heterogeneity unambiguously reduces the negative employment effects of stronger unions. Firm-specific bargaining power creates a link between unionization and the entry and exit of firms, implying a reduction of the unions' expected bargaining power. Moreover, union heterogeneity constitutes an (un)employment effect of trade liberalization. If unions are most powerful in the high-productivity (low-productivity) firms, trade liberalization will increase (decrease) unemployment.

The role of trade unions in promoting CSR in Bangladesh’s ready-made garments sector: the post-pandemic scenario

“…The extant literature classifies stakeholders as governmental or non-governmental (Doh and Teegen, 2002; Olsen, 2017). Some studies highlight the role of various stakeholders such as the state, political parties, and trade unions as crucial factors in organizational controls (Crouch, 2017; De Pinto and Michaelis, 2019). However, others underplay these stakeholders and their concerns and focus on external variables such as technology within a single assessment of environmental ambiguity (Ezzamel, 1990).…”