Unions and Wage Determination: Can Monopsonist Unions Reduce Unemployment?

Abstract. This paper extends the standard closed shop union model of wage determination by introducing endogeneity of union membership. The labor market outcome with endogenous membership may differ when unions behave monopsonisticaly relative to the case where they are "membership-takers", resulting in higher or lower wages (more or less favorable contract curve in efficient bargaining) according to the form union´s utility function and/or implicit decision process value union size. Some notes are added highlighting the role of membership fees in the membership function determination of a union that works as a nonprofit organization.Keywords. Unions, Wage Determination Models, Union Membership, Union Bargaining, Corporatism, Monopsonist Union, (Collective Choice).JEL. J51, J42, E24, D71, P42