why it is a great pressure on municipality public workers on serving the population
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Several recent reviews of the research on public sector union compensation effects conclude that the effects of public sector unions on
compensation, while positive, are generally smaller than the effects of
unions on compensation in the private sector (Lewin 1977; Mitchell
1978; Methe and Perry 1980; Ehernberg and Schwarz 1983; Freeman
1986; Lewis, chap. 6, this volume). However, compensation is only
one of the issues with which unions might be concerned. In particular,
limited empirical evidence suggests that public unions, in addition to
their positive effects on compensation, also have positive effects on
employment (Zax 1985a). Freeman (1986, 52) believes this is characteristic: “public sector unions can be viewed as using their political
power to raise demand for public services, as well as using their bargaining power to fight for higher wages.” He goes on to argue that
while his proposition “requires empirical analysis . . . what is lacking,
and needed, is a consistent analysis of public sector unionism on labor
costs, employment and finances” (p. 62).
In this study, we pursue these issues by examining how municipal
public unions affect employment and pay levels in their own functions
and in other functions in their municipality, the overall budget allocation
for their particular function and for other functions in their municipality,
and the overall level of general expenditures in the municipality. We
analyze the effects of public unions on this broad range of economic
outcomes using an extensive data set on nearly 500 municipalities that
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