Corresponding author: Alejandro Donado, Department of Economics, University of Würzburg, Sandering 2, 97070 Würzburg, Germany, Email: email@example.com.
How trade unions increase welfare*
Article first published online: 9 MAR 2012
© 2012 The Author(s). The Economic Journal © 2012 Royal Economic Society
The Economic Journal
Volume 122, Issue 563, pages 990–1009, September 2012
How to Cite
Donado, A. and Wa¨lde, K. (2012), How trade unions increase welfare. The Economic Journal, 122: 990–1009. doi: 10.1111/j.1468-0297.2012.02513.x
We thank numerous seminar (including Louvain-la-Neuve, Heidelberg and Yale) and conference (including conferences of the Royal Economic Society, EEA, EALE and CESifo) participants for lively discussions and comments, especially Raouf Boucekkine, Bill Brainard, Guido Cozzi, Matthias Doepke, Switgard Feuerstein, Michael Kaganovich, Jürgen Meckl, Giuseppe Moscarini, Paul Segerstrom, Hylke Vandenbussche, Fabrizio Zilibotti and an anonymous referee. We are especially indebted to the Co-editor for very constructive comments. This article and the companion article Donado and Wälde (2010a) are extended versions of an earlier version circulated as Donado and Wälde (2008).
- Issue published online: 3 SEP 2012
- Article first published online: 9 MAR 2012
- Accepted manuscript online: 16 JAN 2012 10:13AM EST
- Submitted: 9 September 2010 Accepted: 27 September 2011
Historically, worker movements have played a crucial role in making workplaces safer. Firms traditionally oppose better health standards. According to our interpretation, workplace safety is costly for firms but increases the average health of workers and thereby the aggregate labour supply. A laissez faire approach in which firms set safety standards is suboptimal as workers are not fully informed of health risks associated with jobs. Safety standards set by better informed trade unions are output and welfare increasing.