This paper looks at wage and employment determination in a dynamic model where some workers, e.g. non-union members, continue to work in the event of a dispute. It shows that both wages and employment may be a non-monotonic function of union density. It can also explain the situation in which unions are sustainable in the long-run. The model is applied to the analysis of the closed shop and some aspects of recent British trade union legislation.

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February 1991     Paper Number CEPDP0020