In the US the unionization rate varies widely both across sectors and states as well as over time. This paper shows that the interaction of firm turnover on the one hand, and costly union organizing on the other plays an important role for unionization outcomes in the US. It combines an entry-exit framework of monopolistically competing firms with endogenous union formation. Unions spend resources to organize firms. A novel feature is that the union both decides about wages and organizing, and that organizing is also motivated by the fact that a higher union share allows for higher wages by decreasing product market competition from non-union firms.

Firm turnover is a crucial determinant of the unionization rate in the US because entering firms are typically born as non-union and have to first be organized by unions. Moreover, the union's firm share usually diminishes only through exit of unionized firms. Thus higher firm turnover requires more union organizing. The unionization rate and union wage is shaped not only by the flow mechanics of union organizing and firm turnover, but also by the equilibrium interaction of endogenous entry with the union's organizing decision: Higher organizing deters firm entry, and conversely higher entry lowers organizing.

Numerical results show that the steady state unionization rate is higher if 1. entry costs are higher, 2. exit rates are lower, and 3. organizing costs are lower. Further, the dynamics of the model support two channels of the long-term union decline in the US: First, a change in the cost of organizing, and secondly, deregulation understood as a decrease in the cost of entry. The model's results are all qualitatively in line with empirical findings.