ABSTRACT
This chapter analyzes the goals, major activities, and overall effects of unions in the context of economic theory. It explores the primary activities of the collective bargaining process and discusses empirical evidence on how unions affect wages, employment, labor productivity, and profits. The chapter describes the voice mechanism that unions can provide. It discusses the implications of a vertical contract curve, in which the social gains or losses of unionization are considered. The analyses of union effects summarize both theory and evidence on how unions affect various labor market outcomes. Labor unions are organizations of workers whose primary objectives are to improve the pecuniary and nonpecuniary conditions of employment among their members. A simple model of the demand for and supply of union activity can be used to explain the forces that influence union membership. Some studies directly analyze unionization and profit levels, holding other things constant.
