In this paper we provide new estimates of the impact of unions on nonunion wage setting. We allow the presence of unions to affect nonunion wages both through the typically discussed channel of nonunion firms emulating union wages in order to fend off the threat of unionisation and through a bargaining channel in which nonunion workers use the presence of union jobs as part of their outside option. We specify these channels in a search and bargaining model that includes union formation and, in our most complete model, the possibility of nonunion firm responses to the threat of unionisation. Our results indicate an important role played by union wage spillovers in lowering wages over the 1980-2010 period. We find de-unionisation can account for 38% of the decline in the mean hourly wage between 1980 and 2010, with two-thirds of that effect being due to spillovers. Both the traditional threat and bargaining channels are operational, with the bargaining channel being more important.

We provide an organizational economics foundation for commitment to information structures in persuasion. An uninformed principal faces a joint screening-and-persuasion problem: she wants to influence a receiver’s beliefs about a payoff-relevant state using information elicited from a privately informed agent. The principal cannot act as an intermediary that commits to an optimal garbling of the agent’s private communications; instead, the agent’s messages are all publicly observed by the receiver. We show that the principal can still (indirectly) implement the optimal unconstrained intermediation scheme. Commitment only to an employment contract with the agent suffices for optimal persuasion of the receiver. We apply our result to the context of a brokerage contracting with a sell-side analyst, where private communication is constrained by conflict-of-interest regulations. We show that a public communication scheme—which closely corresponds to the investment ratings schemes observed in practice—can sidestep these regulations.