Labour Econ Midterm 2

Union

A collective organization of workers of a firm or occupation whose primary objective is to protect and improve the wellbeing of its members

Craft Union

A Union that represents workers in a particular trade/occupation

Industrial Union

A union that represents all of the workers in a particular industry, regardless of occupation

Collective bargaining

A process under which a union negotiates wages, non wage benefits, working conditions, and employment relations

24.2%

What % of workers belonged to unions in 2019?

Union Membership

State of belong to a labour union

-Normally involves paying dues

Union Density

The # of union members / # of potential union members

Sweden Denmark

What two countries are high in both union membership and union density?

US, UK, Japan, New Zealand

What countries/continent have similar union membership and collective agreement coverage?

Europe

What countries have a lot higher collective agreement coverage than union membership?

1867 (Confederation)

Period before which law discouraged collective bargaining, viewing it as criminal conspiracy

1870s (Trade Unions Act)

Period where law was neutral toward collective bargaining

1940s (Wartime Labour Relations Regulations)

Period where law supported collective bargaining and union formation in the private sector

1960s (Public Service Staff Relations Act)

Period where law encouraged collective bargaining and union formation in the public sector

1940s rights

-Workers who met definition of employee had the right to join and form unions

-Collective bargaining rights were protected

-System of certifying bargaining representatives established

-Union is the exclusive representative once certified

-Required to bargain in good faith

-RIghts enforced by labour relations board, occassionally by court

Moderate full time

Which has higher union membership, full time or part time? (and also moderate or large difference)?

Moderate permanent

What has higher union membership, temporary job or permanent job?(and also moderate or large difference)?

Moderate female

Which has higher union membership, male or female? (and also moderate or large difference)?

Increases, 45-54

Union membership typically (increases/decreases) with age until it reaches a point. Which age range has highest union membership?

Increases, Post sceondary diploma

Union membership typically (increases/decreases) with education until it reaches a point. Which education level has highest union membership?

Large public

What has higher union membership, public or private sector? (And is it morderate or large difference?)

Increases

Union membership (increases/decreases) with the size of the employer

15%

What % of the divergence in Canada and US unionization can be attributed to strucural changes in employment?

Legal changes

What is the main reason for the divergence in unionization between US and Canada?

Legal changes (Card check vs mandatory)

What is the main reason for the recent decline in unionzation in Canada?

Nominal wage rate/Price level *100

Real wage rate calculation

Horizontal line

If the union is maximizing real wage rate, what is the shape of the indifference curves?

Vertical line

If the union is maximizing employment what is the shape of the indifference curves?

Income = W*L, Yes

What is the Income calculation when the union is maximizing real wage bill? And can the indifference curve cross the alternative wage rate?

U = L*(W-Wa), No

What is the Utility calculation for when the union is maximizing real economic rent? And can the indifference curve cross the real wage rate

Median voter theory

Theory that group’s preferences will be identical to those of the median voter

Collective agreement coverage

The % of paid workers whose wages and working conditions are covered by a collective agreement

Pareto efficient

When there is no alternative that could make someone better off without making someone worse off

Featherbending

The practice of hiring more workers than needed to perform a job

-A common critique of pareto efficiency

Bargaining power

The power a union possesses in collective bargaining to achieve a wage employment outcome that approaches its ideal outcome

Controlling labour supply

-Apprenticeship system

-Discrimination

-Nepotism

-High union dues

-Closed shop

-Reserve of title certification

-Exclusive right to practice license

Strike

What is the main source of a union’s bargaining power?

Bargaining range

The range of wage outcomes that could feasibly emerge from collective bargaining

Narrower of: Wa and Wu or Wa and W0

Bargaining theory

Body of economic theory concerned with predicting the specific wage employment outcome that might emerge from collective bargaining given the set of Pareto efficient wage employment outcomes

Common elements of all bargaining theories

-Set of possible outcomes

-Mininal acceptable outcome

-Voluntary agreement to participate in bargaining

Threat point

The point in the union firm utility space that corresponds to the outcome in which no collective bargaining agreement for the wage employment outcome is reached (most of the time = 0,0)

Nash Bargaining

A unique solution if:

-Pareto efficiency

-Symmetry

-Transformation invariance

-Independence of irrelevant alternatives

Delay costs

Element of Rubenstein Theory in which parties can exercise leverage by threatening to delay a settlement that imposes costs on the other party