WAGE DETERMINATION AND TRADE UNIONS: A COMMENT1
| Author | F. H. Stephen |
| Date | 01 June 1974 |
| Published date | 01 June 1974 |
| DOI | http://doi.org/10.1111/j.1467-9485.1974.tb00188.x |
Scottish
Journal
of
Political Economy
Vol.
XXI,
No.
2,
June
1974
WAGE DETERMINATION
AND TRADE UNIONS: A COMMENT'
F.
H.
STEPHEN
Wibson and Burkitt (1973)
in
a
recent article in
this
journal discussed the
conflicting claims of the
'
market forces
'
and the
'
power forces
'
schools of
the theory of wage determination. Their conolusion seems
to
be,
as
is
often
the
case,
that there is much to
be
said
on
both sides. They argue, rightly
I
believe, that
'
.
. .
a
more
realistic approach
to
the theory
of
trade
union
behaviour
'
is
one
'
in
which market and power forces are not
seen
as alterna-
tives
'
but
as
each playing some
part
in
influencing trade
mion
behaviour.
In
deriving their
theoretical
model (Part
I1
of
the
paper)
a
serious
omis-
sion
has
been made by the authom2 The model developed
is
static since
no
allowance
is
made
for
changing
prices.
Surely the purpose
of
evolving models
of
wage
idation
is
to explain
ohanging
prices?
Thus the price determination
mechanism as well
as
many other relationships affecting the maximization of
union welfare
need
to
be
kcmporated in
an
adequate model.
MathematicallyS the model of Part
I1
is
only solvable
if
the
'
price
of
hours worked
'
is
fixed and
all
other prices have
a
fixed
relationship
to
it.
This
is
not
a
useful assumption
in
the present
context.
In
the
main
however
this
note is prompted by the
writer's
surprise at
Wi'lkinson's
and
Burkitt's methodological approach
in
Part
In.
Three broad
criticisms
are
made
:
1.
Parts
of
the
data
used
do not correspond to
one
of
the variables used
in
the model.
2.
The level
of
aggregation chosen
is
not appropriate
to
the model.
3.
It is an illegitimate prdure to
use
regression analysis to refute an
economic model.
I
MEASUREMENT
OF
UNIONISATION
The use
by
Hines
(1969)
of
existing
data
on
trade union membership at
an industrial level is criticised by Wilkinsm and BurEtt but they provide
no
1
I
would like
to
thank
R.
L.
W.
Alpine,
E.
E.
Camway and A.
B.
Jack
for their
comments on the first
draft
of
this
comment
I
am
indebted
to
J.
A.
Tbevithick
for
drawing
the
shortcomings
of
Part
11
to
my
notice. The mathematical notation
used
by Wilkinson and
Burfritt
in
their equation
(6)
seems
rather obscure. The
normal
notation for the
first
order
conditions
for
maxhika-
tion would
be
f'x,
=
bP,
Where
f'X,
is
the
first derivative of
f's,
=
bPn
B
=zXiPi
s
with rcs&ct
to
X,
12
177
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