PUBLIC-SECTOR UNIONS AND PUBLIC SPENDING

This study examines the influence of public sector unions on the expan sion of the public sector. Based on public goods theory, our paper mod els how unions influence the supply of and demand for public sector ac tivities. On the demand side, public sector unions are special interes ts which advocate public sector expansion to policy makers; on the sup ply side, they exert pressure to maintain and expand monopoly powers. Empirical evidence supports the hypothesis that a positive relationshi p exists between public sector unionism and public spending.