NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Rise and Fall of Unions in the U.S.

Emin M. Dinlersoz, Jeremy Greenwood

NBER Working Paper No. 18079
Issued in May 2012
NBER Program(s):   EFG

Union membership displayed a ∩-shaped pattern over the 20th century, while the distribution of income sketched a ∪. A model of unions is developed to analyze these phenomena. There is a distribution of firms in the economy. Firms hire capital, plus skilled and unskilled labor. Unionization is a costly process. A union decides how many firms to organize and its members' wage rate. Simulation of the developed model establishes that skilled-biased technological change, which affects the productivity of skilled labor relative to unskilled labor, can potentially explain the above facts. Statistical analysis suggests that skill-biased technological change is an important factor in de-unionization.

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This paper was revised on June 12, 2013

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