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Labor unions, No-raid agreements, Union member-leader relationship, Corporate shareholder-manager relationship, Union democracy, Union takeover market, Labor Management Reporting and Disclosure Act, LMRDA, Principal-agent problems, Market for union control


Business Organizations Law | Labor and Employment Law


In this article, Professor Schwab compares the union member-leader relationship to the corporate shareholder-manager relationship and examines what can be learned from the voluminous literature regarding corporate control about problems of internal union democracy. Specifically, he questions whether a viable market for union control does or could exist that might induce leaders to act in the interests of their members. He analyzes the structural weaknesses in the market for union control and the legal factors inhibiting a union takeover market. Schwab concludes that a weak market does exist, despite the nonprofit nature of unions that limits the ability of leaders to exploit the principal-agent slack, the prevalence of no-raid agreements, and the nontransferability of union interests. He suggests, however, that these same factors may help to solve the monitoring problem and also allow significant divergence between the actions of leaders and the desires of members. In fact, the corporate analogy seems to suggest that perfect alignment between the members and leaders may not be optimal and is too costly to achieve.

Publication Citation

Published in: University of Illinois Law Review, vol. 1992, no. 2 (1992).