Title
Inducing political action by workersInducing political action by workers
Author
Faculty/Department
Faculty of Applied Economics
Research group
Economics
Publication type
article
Publication
Chapel Hill, N.C.,
Subject
Economics
Source (journal)
Southern economic journal. - Chapel Hill, N.C.
Volume/pages
81(2015):4, p. 1117-1144
ISSN
0038-4038
ISI
000353962600015
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
A firm aiming to influence a governmental policy may benefit from political action by its stakeholders, such as workers. This article studies the behavior of such a firm, showing that workers will have a greater incentive to engage in costly political activity against the governmental policy the greater their number and the higher the wage. The firm may, therefore, profit from paying above-market wages and from hiring what might appear to be an inefficiently large number of workers. And because unions may overcome free-rider problems of uncoordinated political effort, a firm may favor unionization, or be less opposed to unionization than it would otherwise be. The results of this article can also explain why firms may little reduce wages in a recession, and why the higher wages paid by unionized firms do not reduce survival rates of these firms.
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