Wage and employment determination under trade unionism: the International Typographical Union

by James N. Dertouzos, John H. Pencavel

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This paper represents the first empirical application of a model of trade union behavior that has been discussed in the literature for over thirty years. The wages and employment of typographers are examined to see whether they can be usefully characterized as the outcome of a process by which the union maximizes an objective function containing wages and employment and is constrained by a tradeoff between these two variables as represented by the employer's labor demand function. Our functional form assumptions permit investigation of some familiar special cases of union behavior. Our more general formulation explains the movement of wages and the employment of workers better than either the wage bill maximization hypothesis or the rent maximization hypothesis.

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