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Do Unions Reduce Discrimination?: A Model of Nash Bargaining Between a Union and an Employer with Discriminatory Tastes

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  • Myles, Gareth D.
  • Naylor, Robin A.

Abstract

Whilst there is a significant empirical literature on the effects of unions on pay discrimination, there is little by way of a rigorous theoretical treatment of this important topic. This is particularly surprising given the many recent developments in the economic theory of the trade union. This paper offers a theoretical framework which integrates models of union-firm bargaining with the analysis of employer discrimination. Within the class of right-to-manage models of union-firm bargaining, we consider the bargain between a rent-maximising union and a utility-maximising employer with discriminatory tastes. Our main conclusion is that only weak conditions have to be satisfied for the presence of a union with bargaining power over the wage rates paid by a discriminating firm to reduce the wage gap between the different worker groups and, in the right-to-manage model, for the wage gap to fall monotonically as union bargaining power increases. Amongst other results, we also find that as employer discrimination increases, the monopoly union bargains a higher wage for the group against which the firm is discriminating.

Suggested Citation

  • Myles, Gareth D. & Naylor, Robin A., 1990. "Do Unions Reduce Discrimination?: A Model of Nash Bargaining Between a Union and an Employer with Discriminatory Tastes," Economic Research Papers 268485, University of Warwick - Department of Economics.
  • Handle: RePEc:ags:uwarer:268485
    DOI: 10.22004/ag.econ.268485
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    References listed on IDEAS

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    1. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-497, June.
    2. Robin Naylor, 1989. "Strikes, Free Riders, and Social Customs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(4), pages 771-785.
    3. repec:bla:scandj:v:87:y:1985:i:2:p:160-93 is not listed on IDEAS
    4. Main, Brian G M & Reilly, Barry, 1992. "Women and the Union Wage Gap," Economic Journal, Royal Economic Society, vol. 102(410), pages 49-66, January.
    5. Brian Chiplin & Peter J. Sloane, 1976. "Sex Discrimination in the Labour Market," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-02784-2, October.
    6. John Goddard & Peter J. Sloane, 2005. "Economics of sport," Chapters, in: Simon W. Bowmaker (ed.), Economics Uncut, chapter 12, Edward Elgar Publishing.
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    Cited by:

    1. Bulkley, George & Myles, Gareth D., 2001. "Individually rational union membership," European Journal of Political Economy, Elsevier, vol. 17(1), pages 117-137, March.
    2. Azam, Jean-Paul & Rospabe, Sandrine, 2007. "Trade unions vs. statistical discrimination: Theory and application to post-apartheid South Africa," Journal of Development Economics, Elsevier, vol. 84(1), pages 417-444, September.
    3. Minas Vlassis & Nick Drydakis, 2012. "Wage discrimination and antidiscrimination policy in unionized industries," Journal of Economics, Springer, vol. 105(1), pages 45-62, January.
    4. Julien Picault, 2013. "Unionization and Labour-market Discrimination: A Closer Look at Non-unionized Workers," LABOUR, CEIS, vol. 27(3), pages 272-287, September.

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