THE EFFECTS OF UNION OWNED SHARES ON THE OUTCOME OF WAGE BARGAINING

The paper investigates the consequences of employee stock ownership in firms where the local union determines the purchase of shares. Who wins and who loses depends on the type of conflict threat that is used by the union. However, no employee share arrangement can simultaneously benefit all union members and external owners. On the contrary, there may be a total loss to be shared due to overmanning. Egalitarian employee stock ownership may therefore not be viable. Inegalitarian employee ownership may be viable. Paradoxically, all union members are better off the more weight the union gives to the members with no shares.