ABSTRACT
In their classic article on the “Two Faces of Unionism,” and their subsequent book, What Do Unions Do?, Freeman and Medoff (1979, 1984, respectively) emphasized the positive-voice face of unions in contrast to the conventional monopoly face that emphasized rent extraction. Under its monopoly face, unions can have negative effects on resource allocation, productivity, and social welfare by fostering strikes and restrictive work practices as well as by raising wages above the competitive norm. In contrast, by serving as the institutional embodiment of voice at the workplace, unions could have positive effects on productivity, cost, and social welfare. This could occur through various voice mechanisms: articulating the preferences and internal trade-offs of workers; improving communications between workers and management; fostering due process and restricting the capricious actions of managers; reducing quits; and “shocking” management into more efficient work practices. Even in the case of strikes, positive cathartic effects may ensue and pent-up frustrations may be released, highlighting how the same mechanism can have positive as well as negative effects. Unions can foster such voice mechanisms by providing protection for the use of voice and by providing workers collectively with the incentive to use voice given its public goods nature whereby all workers can benefit, and it is not possible to exclude free riders or non-payers from the potential benefits (Freeman and Medoff, 1984: 8; Kaufman, theory chaoter this volume, p. 35).
