An Economic Theory of the Incidence and Growth of Trade Unionism

Abstract

The theory of trade unions, why they are formed, why they grow and their life cycle, has been discussed with decreasing frequency in the economics literature in the past decade. This neglect was undoubt- edly due to the quiescence of American unionism, both in established unions and in areas of potential union growth. With the increased mil- itancy of some unions, particularly those of professional employees, and the unions’ continued emphasis on economic issues, economists still have the task of explaining the reasons for union growth. In this essay we examine the rapid increase in activity among organized profes- sionals and test whether it can be explained by any existing theories of the genesis of trade unions. We then formulate a general theory of trade unions to explain the economic motivations for this militancy. This theory has the virtue of being explicitly derived from the utility- maximizing behavior of an individual worker; it is thus directly related to certain strands of contemporary economic theory. The implications of this new theory are then tested, and possible future loci of union militancy are discussed.