Can Monopoly Unionism Explain Publicly Induced Retirement?

Abstract

It has long been suggested that trade unions take actions and favor public policies that reduce the quantity of labor so that union members might enjoy greater labor incomes. Can this explain the prevalence of generous public pension programs inducing retirement? I formalize the monopoly unionism model and show how labor’s interest in reducing the quantity of labor cannot explain why the old are induced to retire rather than discouraging work among workers of all ages. Discouraging work of a subset of union workers introduces allocative inefficiencies without promoting the objectives of the monopoly union. And, unless the old have a disproportionate influence within the union, union interests cannot explain why public pension programs are so generous.

Hard and electronic copies of the paper are circulated as:

NBER Working Paper No. 7680, April 2000.