SFB 303 Discussion Paper No. A - 477

Author: Corneo, Giacomo G.
Title: The Theory of the Open Shop Trade Union Reconsidered
Abstract: In this paper a microeconomic foundation of the social custom approach to trade union membership is provided. The reputation effect of belonging to the union is endogenized as the outcome of a signalling game among the workers. The signalling value of being a union member depends in equilibrium on the union density, but the form of this relationship may turn to differ from what is usually assumed in the literature. Conditions for the existence of a critical mass that is necessary for union viability are determined and given a precise interpretation in terms of status-seeking behaviour. Finally, implications for optimal unionism are derived.
Keywords: trade union membership, social custom models, status seeking
JEL-Classification-Number: J50, J51
Creation-Date: March 1995
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