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Unions in a General Equilibrium Model of Firm Formation

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  • Kuhn, Peter

Abstract

Unions are introduced into a general equilibrium model of firm formation. The author finds, under reasonable conditions, that la rge firms are more likely to be unionized, and that unionized firms a re more productive and "better managed" than nonunion firms of the same size. As well, unions reduce economic efficiency by distorting t he "occupation choice" decision between managing a firm and working in one. Perhaps surprisingly, this distortion persists even when ind ividual union contracts set both wages and employment in a fully effi cient manner but can disappear when the mechanism that allocates prop erty rights to union jobs is changed in certain ways. Copyright 1988 by University of Chicago Press.

Suggested Citation

  • Kuhn, Peter, 1988. "Unions in a General Equilibrium Model of Firm Formation," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 62-82, January.
    • Handle: RePEc:ucp:jlabec:v:6:y:1988:i:1:p:62-82
    DOI: 10.1086/298175
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    Cited by:

    1. Florian Baumann & Tobias Brändle, 2017. "We Want Them All Covered! Collective Bargaining and Firm Heterogeneity: Theory and Evidence from Germany," British Journal of Industrial Relations, London School of Economics, vol. 55(3), pages 463-499, September.
    2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 503-530.
    3. de Pinto, Marco & Lingens, Jörg, 2019. "The impact of unionization costs when firm-selection matters," Labour Economics, Elsevier, vol. 60(C), pages 50-63.

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