The Analytical Framework

Abstract

This chapter lays out the analytical framework, which shows how competition (exit) and collective action (voice) affected the economic welfare of coal miners. The framework starts with a basic economic model in which employers compete with hundreds of other mines when hiring labor. The model of labor market competition is expanded to consider the impact of positive information and transportation costs. In competing for labor, employers could alter not only wages but a number of other features of the employment package, like safety or the quality of life in the company town. Unionization alters the nature of bargaining between miners and employers. Neoclassical labor economists argue that labor unions, by limiting labor supply to employers, raise wages for their members at the expense of non-union workers and employers. Unions in some settings can provide benefits to both employers and workers by helping workers negotiate workplace public goods, by cutting turnover, and by raising morale.

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