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Intermediate Microeconomics

10. Unions

Unions are often considered the only institution that represents the interests of workers. While union membership has fallen steadily over time, unions still represent a nontrivial share of the workforce. In our framework, we assume that the goal of a union is to maximize the well-being of its members and a firm is assumed to maximize its profits. In these pencasts, we examine the decision to join a union, the crowding or spillover effects of unions, monopoly unions, contracts between unions and firms, strikes and the optimal duration of a strike.

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Decision to Join a Union

This Pencast uses the labor-leisure model to examine the decision to join a union. [Play Pencast]

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Crowding Effects

This Pencast demonstrates that an above-market-clearing wage has the potential to lower wages in nonunion sectors, as unemployment in the union sector can spillover and increase supply in the nonunion sector. [Play Pencast]

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Monopoly Union

This Pencast illustrates how a union maximizes its utility subject to the firm's demand for labor. [Play Pencast]

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Demand Curve and the Firm's Isoprofit Curves

This Pencast illustrates a a firm's demand curve for labor and their isoprofit curves. It is shown that along a given isoprofit curve that the firm must lower the wage to reduce or raise employment. [Play Pencast]

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Efficient Contracts

This Pencast develops a model that shows the efficient combinations of wage and employment that makes the union better off but the firm no worse off and the firm better off but the union no worse off. [Play Pencast]

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Strongly Efficient Contract

This Pencast demonstrates that a vertical contract curve is strongly efficient, as the same number of workers are hired as would be in a competitive labor market. [Play Pencast]

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Strikes and Hick's Paradox

This Pencast discusses strikes and depicts a situation, which is known as the Hick's paradox, in which both the firm and union are worse off following a strike. [Play Pencast]

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Optimal Duration of a Strike

This Pencast posits that workers may not possess complete information about a firm's financial well-being, making their demands unreasonable. We illustrate the optimal duration of a strike by using a union resistance curve and the firm's isoprofit curves. [Play Pencast]

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