This paper argues that wage determination is best seen as a kind of rent-sharing in which workers' bargaining power is influenced by conditions in the external labor market. It uses British establishment data from 1984 to show that pay depends upon a blend of insider pressure (including the...

This paper constructs a dynamic model of trade-union behavior in which union membership is endogenous. Unemployed workers are assumed to leave their union (as they seem to in reality) and the union must therefore solve an intertemporal optim ization problem. The results imply that conventional...