Unions that try to maximize rents will cannibalize the company. This is my take on a paper written by Micheal Kremer and Benjamin A. Olken. Marginal Revolution has a link here. When unions collectively bargain they must strike a win-win outcome. Unions who succeed in extracting higher wages might find that companies will substitute capital for labor or innovate less since there's less money for infrastructure spending.
Most unions are in the public sector.
When unions bargain, they might try to eliminate substitutes for their labor by demanding certified labor or stiffer OSHA regulation. If a union can change the demand for their labor, then it can increase employment for its members. A union that faces an elastic demand curve will increase wages at the expense of member employment. A union faces some difficult trade offs.
How does the union boss begin a fairy tale to his kid? Once upon a time and a half....
Ive read this topic for some blogs. But I think this is more informative.
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