A multisectorial matching model of unions

We develop an equilibrium matching model where unions have an important institutional presence. Monopolistic competition characterizes the goods market, where only some sectors are unionized. Thus, the model can vary the coverage of collective bargaining. It can vary the degree of coordination between unions, and alternatively consider “national” and “sectorial” unions. Calibration to the union premium implies a workers’ rent extraction parameter much lower than assumed in the matching literature. We introduce unemployment insurance to study the interactions of policies with unions and find that unions only push for more generous benefits if this does not entail higher payroll taxes.