Using 1980 data for a large sample of U.S. cities, the author reexamines recent empirical findings of a positive association between public sector unionization and municipal employment. Several researchers have interpreted this correlation as evidence that public employee unions successfully exert political pressure to raise the demand for municipal services. Structural estimates of labor demand and the determinants of police and fire unionization reveal, however, that economies of scale in union formation are at least partly responsible for any positive association between public sector unionization and municipal employment. The author concludes that previous studies overstate the amount of political clout wielded by municipal labor unions.
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