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Trade Unions, Market Concentration and Income Distribution in United States Manufacturing Industry

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  • Henley, Andrew

Abstract

The question of what effect if any trade unions have on the functional distribution of income is an old one. Conventional production theory suggests that the presence of a monopoly element on the supply side of a particular labour market may well raise wages but in the long run any factor substitution away from labour would have an ambiguous effect on the factor income distribution depending on the value of the elasticity of substitution. Distribution gains would only accrue to labour under conditions of inelastic factor substitutability (see, for example, Addison & Siebert 1979). A considerable body of econometric research (surveyed in King and regan 1976) has given general credence to the view that the elasticity of substitution between capital and labour, using cross sectional analysis, is equal to one across a large array of different industries. Adoption of this "stylised" fact leads to the conclusion that a rise in the price of labour would cause such a substitution from labour to capital as to leave the functional distribution unaffected. One might therefore conclude that trades unions can have little or no effect on income distribution.

Suggested Citation

  • Henley, Andrew, 1984. "Trade Unions, Market Concentration and Income Distribution in United States Manufacturing Industry," The Warwick Economics Research Paper Series (TWERPS) 255, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:255
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    Cited by:

    1. Andrés O. Dávila & Manuel Fernández & Hernando Zuleta, 2021. "The Natural Resource Boom and The Uneven Fall of The Labor Share," Documentos CEDE 19427, Universidad de los Andes, Facultad de Economía, CEDE.
    2. Andrew T. Young & Hernando Zuleta, 2016. "Golden Rules of Wages," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 253-270, July.
    3. Cowling, Keith, 1990. "Monopoly Capitalism Revisited," Economic Research Papers 268484, University of Warwick - Department of Economics.
    4. Young, Andrew T. & Tackett, Maria Y., 2018. "Globalization and the decline in labor shares: Exploring the relationship beyond trade and financial flows," European Journal of Political Economy, Elsevier, vol. 52(C), pages 18-35.
    5. Cowling, K., 1990. "Monopoly Capitalism Revisited," The Warwick Economics Research Paper Series (TWERPS) 365, University of Warwick, Department of Economics.
    6. Bae-Geun Kim, 2016. "Explaining movements of the labor share in the Korean economy: factor substitution, markups and bargaining power," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(3), pages 327-352, September.
    7. Dögüs, Ilhan, 2017. "Rising wage dispersion between white-collar and blue-collar workers and market concentration: The case of the USA, 1966-2011," ZÖSS-Discussion Papers 62, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    8. repec:wvu:wpaper:11-06 is not listed on IDEAS
    9. Shim Hyein & Chung Chune Young & Ryu Doojin, 2018. "Labor income share and imperfectly competitive product market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 18(1), pages 1-16, January.
    10. Andrew T. Young & Hernando Zuleta, 2018. "Do Unions Increase Labor Shares? Evidence from US Industry-Level Data," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(4), pages 558-575, September.
    11. Bae-Geun Kim, 2016. "Explaining movements of the labor share in the Korean economy: factor substitution, markups and bargaining power," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(3), pages 327-352, September.
    12. Amitava Dutt & Anindya Sen, 1997. "Union bargaining power, employment, and output in a model of monopolistic competition with wage bargaining," Journal of Economics, Springer, vol. 65(1), pages 1-17, February.
    13. Rudy Fichtenbaum, 2009. "The Impact of Unions on Labor's Share of Income: A Time-Series Analysis," Review of Political Economy, Taylor & Francis Journals, vol. 21(4), pages 567-588.

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