Discussion paper

DP18155 Labor Associations: The Blue Wall of Silence

We develop a model showing that when labor demand is inelastic and individual behavior is easily monitored a firm’s employees may prefer to protect its shirkers. By optimally reducing overall effort and increasing wages for all, a labor association rationally uses its monopoly power as described in the left wing labor slogan “work less so that all may work.” In addition, employees have a strong incentive to conceal information about peers’ performance from firms, what has been infamously known as the blue wall of silence in the case of the police. We argue that a number of recently proposed remedies to this problem are unlikely to succeed and suggest a more promising alternative: increase competition.

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Citation

Levine, D, A Mattozzi and S Modica (2023), ‘DP18155 Labor Associations: The Blue Wall of Silence‘, CEPR Discussion Paper No. 18155. CEPR Press, Paris & London. https://cepr.org/publications/dp18155