UNIONISM AND RELATIVE WAGES: DIRECT AND INDIRECT EFFECTS.

This article discusses a study which explored the causal relationship between unionism and wages. Using simultaneous equation techniques, both the effect of unions on wages in the short run and the effect of unions on wages in the long run are examined. Wages in the short run control the reverse effect of wages on unionism, while wages in the long run allow the changes in production technique and skill mix induced by the short-run wage effect. In contrast to previous literature using similar techniques, the study concludes that unions have a significant wage effect in both the short and long run.