Is Unemployment Lower if Unions Bargain Over Employment?

Abstract

Would there be more employment if unions bargained over employment, and not only over wages? Most economists seem to answer Yes:1Proposition 1If unions bargain over employment and wages, employment will be higher than if they bargain only over wages. Most economists also believe the following:Proposition 2If unions bargain over employment and wages and are utilitarian and risk-averse, then `equilibrium employment is higher than in the equivalent competitive labour market' (Oswald. 1985).So, in the eyes of many, bargaining over employment is a good thing.