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Edited by John T. Addison and Claus Schnabel
Chapter 3: Economic Models of Union Behaviour
Robin Naylor 1. Introduction Surveying the literature on the economic theory of trade unions in the mid1980s, Oswald (1985, p. 160) observed the remarkable growth of work in the area which had occurred during the previous decade. He also stressed the change in character of this work compared to what had gone before, arguing that ‘We now appear to be a little closer to a situation in which it could be said that there is an orthodox, methodologically conventional and testable theory of the trade union’. This contrasted starkly with the situation described just ten years earlier by Johnson (1975, p. 23), who wrote that the ‘. . . absence of a solid theoretical foundation has handicapped the economic analysis of trade unions and has surely contributed to its decline in relative attention’. There are many reasons for the exponential growth in the theoretical literature on unions from the late 1970s. A major factor was the new emphasis on the importance of micro-foundations (and, not least, micro-foundations of labour market behaviour)1 for macroeconomic analysis and, in that context, it is not surprising in hindsight that much of the early post-1970s work on unions focused on the issue of how to specify union preferences and constraints appropriately. For example, in his state-of-the-art survey on models of union behaviour, published in the Handbook of Labor Economics, Farber (1986) concentrates on two related issues. The ﬁrst concerns the question of how to model union objectives and the second concerns the deﬁnition of the scope...
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