Term 2 - Chapter 7 Flashcards
Why are big firms and public sector more unionised?
Benefits are greater - bigger ‘union markup’ available
Costs of organising lower
Draw the models of union wage-setting graph and explain
Notes
Can unions set employment as well as wages?
The point is that unions may be able to set employment as we,l as wages - these contracts will be ‘off the demand curve’ and will be ‘efficient’ because Union gains jobs and firms no worse off
If off the demand curve bargains occur, union must have power to stop firms cutting employment when wages are raised
Obviously efficient bargaining leads to less employment loss
Explain the data behind extended collective agreements
Coverage of collective agreements is higher than union density (non union workers receive union wages)
France is extreme: union density approx 10% but coverage approx 90% due to extended agreements
U.K. had extended collective agreements in the 70s under labour
Martin et al use OECD data to show that extended collective agreement coverage increased unemployment, particularly when taxes are high
The implication is that extended collective agreements cause wage inflexibility which stops wages falling when taxes rise
Draw the graph illustrating how high taxes magnify the MW or union wage disemployment effect
Notes
Explain what corporatism is
Extended agreements are an aspect of corporatism - main union and employer orbs ‘incorporated’ into government, ‘centralisation’
EU stresses social partners = corporatism
Incorporation means “encompassing coalitions” - unions more responsible
Conclusion: strong unionism can be good if incorporated into government
Explain the positives and negatives of corporatism
Corporatism = centralisation and bargaining coordination
Corporatism reduces unemployment
But corporatism also means high taxes, employment protection and welfare benefits, all of which raise unemployment
So corporatism has problems but it may be a way of taming unions
Draw the graph unions and output graph
Notes
Draw the unions and strikes graph
Notes
Explain why there is a negative link between earnings compression and unemployment
When pay at the bottom rises, the 90:10 ratio falls. At the same time, unemployment rises for those at the bottom (since D curves slope downwards). Hence unemployment rises as the 90:10 ratio falls.
Unions come into the picture because they aim to raise the pay of those at the bottom, and there is a concomitant rise in unemployment of those at the bottom, just as in the graph.
Do unions help wage inequality?
Unions must reduce wage inequality, at least at the bottom end (top end responds to bonuses in the city for example)
If unions reduce job opportunities for outsiders (young, ex offenders), then more on welfare - but if welfare benefits good, no problem?
But good welfare benefits do not make up for lack of a job - unemployed are v unhappy
We can think of the ‘job distribution’ too - high long term unemployment means jobs are unequally distributed
So we come back to unemployment, specifically long term unemployment
What is the British policy in trade unions?
Notes
