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Do Unions Affect Innovation?

Author

Listed:
  • Daniel Bradley

    (Department of Finance, University of South Florida, Tampa, Florida 33620)

  • Incheol Kim

    (Department of Finance, Fordham University, New York, New York 10023)

  • Xuan Tian

    (Finance Department, Indiana University, Bloomington, Indiana 47405; and PBC School of Finance, Tsinghua University, 100083 Beijing, China)

Abstract

We examine the effect of unionization on firm innovation, using a regression discontinuity design that relies on “locally” exogenous variation generated by elections that pass or fail by a small margin of votes. Passing a union election results in an 8.7% (12.5%) decline in patent quantity (quality) three years after the election. A reduction in R&D expenditures, reduced productivity of inventors, and departures of innovative inventors appear to be plausible underlying mechanisms through which unionization impedes firm innovation. In response to unionization, firms move their innovation activities away from states where union elections win. Our paper provides new insights into the real effects of unionization.

Suggested Citation

  • Daniel Bradley & Incheol Kim & Xuan Tian, 2017. "Do Unions Affect Innovation?," Management Science, INFORMS, vol. 63(7), pages 2251-2271, July.
    • Handle: RePEc:inm:ormnsc:v:63:y:2017:i:7:p:2251-2271
    DOI: 10.1287/mnsc.2015.2414
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    References listed on IDEAS

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