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unions

In developed countries, at least, trade union membership and influence has declined over the past three decades. Fewer wages are now set by collective bargaining, and far fewer working days are lost to strikes. Unions, which are in effect a cartel of workers, probably make unemployment higher than it would be without them, as collective bargaining often pushes wages above the level that would bring labor supply and demand into equilibrium. These higher wages increase supply and reduce demand, with the result that there are more jobless people. Unions thus deepen a conflict between those in the labor market who are insiders, that is, union members, and those who are outsiders, typically non-unionized, poorly paid or jobless people. However, unions can combat the excessive market power of some firms, particularly when the firms (or a government) dominate a particular job market. They can support workers who are badly treated by management. They may sometimes provide an efficient, and thus valuable, channel for communication between workers and managers, particularly in countries such as Germany, where conflict between management and unions is viewed as unhealthy.

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