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THE RISE AND FALL OF UNIONS IN THE U.S.

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June 2012

Written by: Emin Dinlersoz, Jeremy Greenwood

Working Paper Number:

CES-12-12R

Abstract

Union membership in U.S. displayed a n-shaped pattern over the 20th century, while in- come inequality sketched a ?. A model of unions is developed to analyze this phenomenon. There is a distribution of productivity across firms in the economy. Firms hire capital, plus skilled and unskilled labor. Unionization is a costly process. A union chooses how many firms to organize and the union wage. Simulation of the model establishes that skill-biased technological change, which a?ects the productivity of skilled labor relative to unskilled labor, can potentially explain the above facts. Statistical analysis suggests that skill-biased technological change is an important factor in deunionization.

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industrial, labor, workforce, worker, gdp, union

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Center for Economic Studies, Organization for Economic Cooperation and Development, Computer Aided Design, Longitudinal Business Database, Michigan Institute for Teaching and Research in Economics, Information and Communication Technology Survey

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