Who Pays for Unions?
A new article in The Quarterly Journal of Economics examines who ultimately bears the cost when unions negotiate higher wages.
In “Who Pays for Unions?” Samuel Dodini, Anna Stansbury, and Alexander Willén use rich Norwegian administrative data to study how the costs of higher union wages are distributed across the economy. Rather than falling on a single group, the authors show that the incidence of higher wages depends critically on the market environment in which firms operate.
The findings show that the costs are shared across consumers, shareholders, and workers, with the relative burden varying systematically according to product and labour market conditions
Taken together, the study provides new insight into the economic consequences of collective bargaining and how market power shapes the distributional effects of union wage increases.