What Do Unions Maximise? Evidence from Survey Data

Mathematically tractable models of unionism have been well developed and are widely used in the economics literature. However, assumptions about union goals and preferences, and how these are determined, are not supported by extensive empirical evidence. Following the lead of Clark and Oswald [1993], this paper explores these questions through a survey of union leaders to ascertain the range of union goals and their preferences. The results of the survey present convincing evidence that standard models do not adequately capture union bargaining behaviour, or union goals and preferences. I make three major conclusions from the survey data. First, neither the Right-To-Manage nor Efficient Bargain models provide an adequate ‘stylised fact’ which describes union-firm bargaining. Instead union bargaining over employment appears to be asymmetric around current levels of employment in that bargaining is more likely to occur where there are employment decreases. Second, while wages and employment represent the two most important goals which unions pursue, the standard model provides an inadequate basis for understanding the full set of goals unions pursue. Third, I also conclude that while the industrial relations approach is able to capture union goals in a more complete sense, the idea of a rational maximising union cannot be rejected. 1 School of Industrial Relations and Organizational Behavior, University of New South Wales, Sydney, 2052, Australia. The original survey on which this paper is based was funded by the Department of Management and Industrial Relations, University of Melbourne, and the 1997 survey was funded by Special Research Grant No. C2189R from UNSW. I would like to thank Donna Buttigieg, Rick Iverson and Christopher Worswick for helpful suggestions in the construction of the survey, and Alice Salamon for her research assistance. I have also benefited from several conversations and feedback from Garry Barrett, Simon Bell, Braham Dabscheck, Jeff Borland, Ian McDonald and James Robinson. Any errors of fact or interpretation remain my own.