Journal of Labor Economics Vol. 1 No. 4 1983
Unions, Relative Wages, and Economic Efficiency
Abstract
The ability of unions to raise the wages of their members above the wages of similar but nonunionized workers is well documented. This paper examines empirically the implications of that wage differential for resource allocation and economic efficiency. This is accomplished by explicitly solving a numerically specified general equilibrium system with and without the wage differential. Comparison of the two solutions yields the desired information. The findings indicate that the wage premium results in adjustments in prices and quantities of factors and commodities that vary widely across industries. These adjustments are found to carry a small deadweight loss, as measured by the Hicksian equivalent variation.
- DOI
- 10.1086/298020
- Volume
- 1
- Issue
- 4
- Pages
- 408-429
- Language
- en
- Sources
- openalex crossref