Labor Associations: The Blue Wall of Silence

We develop a model showing that when labor demand is inelastic and individual behavior is easily monitored a rm's employees may prefer to protect its shirkers. By optimally reducing overall e ort and increasing wages for all, a labor association rationally use its monopoly power as described in the left wing labor slogan work less so that all may work. In addition, employees have a strong incentive to conceal information about peers' performance from rms, what has been infamously known as the blue wall of silence in the case of the police. We argue that a number of recently proposed remedies to this problem are unlikely to succeed and suggest a more promising alternative: increase competition.