International Handbook of Trade Unions

International Handbook of Trade Unions

Elgar original reference

Edited by John T. Addison and Claus Schnabel

This Handbook is an authoritative and invaluable reference tool, uniquely analysing the forces governing unionism, union behaviour and union impact from a variety of perspectives, both theoretical and empirical. The 14 chapters are written in an accessible style by acknowledged leading specialists from the fields of economics and industrial relations. They offer a truly international perspective on this important subject.

Chapter 6: Collective Bargaining and Macroeconomic Performance

Robert J. Flanagan

Subjects: business and management, human resource management, economics and finance, labour economics, social policy and sociology, labour policy


Robert J. Flanagan 1. Introduction Labour unions emerge in virtually all countries, irrespective of stage of development or ideological orientation, as the main vehicle of collective representation of worker interests. But the institutional arrangements through which unions seek to improve the lives of their members vary widely across countries. Moreover, few unions can restrict the consequences of their actions to their members. In most countries, union wage increases spread to non-members through a variety of mechanisms, including threat effects and legal extension. To the extent that union wage impacts exceed productivity impacts, unions will also alter the prices of the products that their members produce, thereby influencing the welfare of consumers. The ultimate influence of collective bargaining on third parties is through its impact on macroeconomic performance. Concerns over the effects of unregulated collective bargaining on unemployment, inflation and the resilience of national economies in the face of macroeconomic shocks frequently motivate actual or threatened government interventions into the collective bargaining process. This chapter evaluates theory and evidence on the relationship between collective bargaining and macroeconomic performance in industrialized countries. One clear theme from research on this question is that the impact of collective bargaining on macroeconomic performance varies with the strikingly diverse collective bargaining arrangements found around the world. A second theme is that knowledge of these arrangements alone is no longer sufficient to provide reliable predictions on macroeconomic outcomes. The aggregate effects of collective bargaining increasingly appear to depend on interactions...

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