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Abstract

Recently some state and local governments in the United States have sharply reduced or eliminated public employee unionism and bargaining rights in the belief that their fiscal adversity stems mainly from overcompensation of public employees caused by collective bargaining. The authors examine public–private sector pay and benefit relationships, the effects of unions on public employee pay, the effectiveness of employment dispute resolution procedures, and the ability of public sector labor and management to combat fiscal adversity. They provide new evidence showing that: on balance, public employees are undercompensated relative to their private sector counterparts; the effects of unions on compensation are smaller in the public than in the private sector; and public sector dispute resolution procedures and joint labor-management initiatives to reform work function reasonably well.

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