Delegation and Wage Determination in Trade Unions Laszlo Goerke ± Carsten Hefeker Abstract. Delegation of wage determination is modelled as the transferral of decision-making rights to better-informed agents. The rank and file of trade unions has less information and can, therefore, benefit from delegation. However, delegation might be disadvantageous for union members, since delegates pursue their own objectives. Also, delegates might incur a utility reduction, since becoming a delegate implies forfeiting a better-paid outside option. We investigate under what conditions delegation of wage bargaining power is beneficial for union members and their potential leaders. The wage and employment effects of delegation are derived. 1. Introduction Who becomes a union leader? In his famous book on trade unions, Albert Rees claimed that the `top officers of national unions are usually men who have begun as workers in the trade and have worked their way upward through the union hierarchy' Rees, 1989, p. 163). However, casual empiricism suggests that the erstwhile worker who has risen through the ranks of the union to finally become its leader is replaced more and more often by someone who could also represent the employers' side. Are other LABOUR 14 3) 393±416 2000) JEL D7, D8, J51 # Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 2000, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA. Laszlo Goerke, University of Konstanz, Department of Economics D 138, D-78457 Konstanz, Germany. Carsten Hefeker, University of Basel, Department of Economics WWZ), Petersgraben 51, CH-4003 Basel, Switzerland. The authors are grateful for helpful and constructive comments by an anonymous referee and to Manfred J. Holler, Stefan Napel, Georg NoÈldeke and participants of the Annual Meeting of the European Public Choice Society in Siena for their suggestions, comments and advice. We retain responsibility for all inadequacies.