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Can Union Labor Ever Cost Less?

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  • Steven G. Allen

Abstract

This paper examines the effect of unions on efficiency by estimating cost function systems over three different sets of construction projects. The results show that union contractors have greater economies of scale. This gives them a cost advantage in large commercial office buildings, but in school and hospital construction, nonunion contractors have lower costs at all output levels. Despite the cost differences, profits for nonunion contractors in school and hospital construction are no higher than those for union contractors because the burden of higher union costs is shifted to buyers.

Suggested Citation

  • Steven G. Allen, 1987. "Can Union Labor Ever Cost Less?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 347-373.
    • Handle: RePEc:oup:qjecon:v:102:y:1987:i:2:p:347-373.
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    File URL: http://hdl.handle.net/10.2307/1885067
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    Cited by:

    1. Kevin Duncan & Peter Philips & Mark Prus, 2006. "Prevailing wage legislation and public school construction efficiency: a stochastic frontier approach," Construction Management and Economics, Taylor & Francis Journals, vol. 24(6), pages 625-634.
    2. Addison, John T. & Chilton, John B., 1993. "Can We Identify Union Productivity Effects?," MPRA Paper 83134, University Library of Munich, Germany.
    3. Daniel P. Kessler & Lawrence F. Katz, 2001. "Prevailing Wage Laws and Construction Laborc Markets," ILR Review, Cornell University, ILR School, vol. 54(2), pages 259-274, January.
    4. Carlos Lamarche, 2013. "Industry-wide work rules and productivity: evidence from Argentine union contract data," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-25, December.

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