Union membership and employment dynamics with endogenous union density

Based upon an intertemporal optimizing model of trade unions, this paper proposes a plausible union density function and examines the relative level of employment between the intertemporal model and the conventional static model. We find that endogenizing union density provides an incentive for the union, that is concerned about its future membership level, to hire a lower level of employment. This opens the way to obtain the result that employment is lower in the intertemporal model than in the conventional static model. We also find that the equilibrium employment level may not display a positive linkage with union membership after endogenizing union density.