Sunday, November 08, 2026

La Dolce Vita? The Economics of Italian Train Strikes

Last semester, I studied abroad in Florence, Italy. During my time there, I experienced numerous train delays due to strikes organized by unions.

It wasn't apparent then, but now I see that how Friedman's rulemaker and umpire regulates different interest groups dictates how they are able to behave significantly: Italian labor unions have significantly more influence than in the US.

 

Another factor impacting union behavior is the number of members and groups involved. There are six transport labor unions participating in strikes tomorrow for better pay and working conditions; a higher group size leads to a greater probability for an employee to find a group tailored to their individual preferences. This differs from the US, where there is on average one union that functions as the "exclusive bargaining unit" for a given workplace. In Italy, union membership comprises around 1/3 of overall workers compared to only about 10% of workers in the US.

 

The costs of the strikes can fall on several different groups, from one as large as one of the rail companies that suffers great monetary losses to one as small as study abroad students like myself whose trip was delayed.

 

Non-union members still receive contract benefits if labor unions' strikes are successful, which creates a free rider problem because people can receive the benefits union members pay for through their time striking and instead receive wages from working on the day of the strike. People can also be members of the union and do the same, but there is likely more social pressure from within the group incentivizing members to strike. 


Although the free rider problem is more prevalent in large groups, when a union engages in protests it is more effective as group size increases. The transport unions, for instance, are more effective because they're composed of individuals working at train stations across Italy rather than a single station. The selective incentives from union membership include personal representation, discounted legal assistance, and fee reductions for tax returns.

 

No individual benefactor exists like in a privileged group to influence the contractual change that achieves the optimal amount of rent in a way a large group can in a protest.

No comments: