Unions, bargaining, or family capitalism: effects on wages and job protection.

Summary This thesis examines the economic impact of unions and family businesses. It begins by examining the effect of union presence on the wage structure of firms. We show that employees in firms with a union representative are paid on average 3% more than their counterparts in firms without unions. These gains increase to about 10% in firms with rents and/or a high proportion of unionized employees. The presence of a union representative also induces a slight wage compression, higher earnings for blue-collar and older workers, and labor force stabilization. We then model employees' decisions to become a shop steward or simply a union member and the strategic interactions between the shop steward and his employer during negotiations. We develop a probabilistic method to decompose the wages of unionized employees according to whether they are stewards or not and find that stewards are paid on average 10% less than their union and non-union colleagues. Numerous tests suggest that this result reflects rational discrimination by employers against stewards. Finally, we show using panel data that wages are 5% lower in family firms. The lower wages reflect for 2% a selection of the least competent employees in family firms. The remaining gap is compensated by better job protection: actual and perceived layoff rates are indeed lower in family firms.