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Cambridge Journal of Economics 26:279-297 (2002)
Copyright © 2002 Cambridge Political Economy Society

Article

(What) do unions maximise? Evidence from survey data

Peter G. Gahan *

*School of Industrial Relations and Organisational Behaviour, UNSW, Sydney, and AEUIA Fellow, Department of Political and Social Sciences, European University Institute, Florence.

Address for correspondence: Peter G. Gahan, School of Industrial Relations and Organisational Behaviour, University of New South Wales, Sydney 2052, Australia; email: p.gahan{at}unsw.edu.au

Abstract

Highly formalised models of union behaviour have been developed and are widely used within neoclassical economics. This approach is justified by the argument that most goals pursued by unions can be reduced to a wage (or wage-equivalent)–employment trade-off. However, the strong assumptions made about union goals and preferences, how these are determined and the range of issues over which a union will seek to bargain with a firm are not supported by extensive empirical evidence. This paper explores these issues through a survey of union leaders to ascertain the range of union goals and their preferences, and the types of issues over which unions bargain with employers. The results of the survey present convincing evidence that standard neoclassical models do not adequately capture union bargaining behaviour, or union goals and preferences. The findings presented here also throw open, but do not resolve, the question of whether unions are ‘rational maximisers’. The most interesting result—not widely found within the economics or industrial relations literature—concerns the nature of union bargaining preferences. Union bargaining over employment appears to be asymmetric around current levels of employment, in that unions appear to care more about the employment implications of their bargaining strategies when they are likely to result in employment decreases.

Key Words: Trade union objectives • Rational choice theory • Institutional economics • Collective action


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