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Unionization and Input Flexibility in U.S. Manufacturing, 1973 – 1996

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  • Elisabetta Magnani
  • David Prentice

Abstract

Input flexibility, as measured by the ability of firms to vary input demand in the face of changes in input prices, is an important dimension of labor market flexibility. Using a new dataset, the authors analyze the impact of unionization on input flexibility in U.S. manufacturing from 1973 to 1996, a period in which production was arguably becoming more flexible due to deep changes in the U.S. industrial relations system and in the broad macroeconomic environment. The authors quantify the effects of unionization on input flexibility by estimating elasticities of substitution between a broad range of labor and non-labor inputs, controlling for unionization. The pattern that emerges is more complex than that suggested by other research. In particular, low unionization apparently is associated with greater flexibility in the use of labor inputs but less flexibility in the use of non-labor inputs.

Suggested Citation

  • Elisabetta Magnani & David Prentice, 2006. "Unionization and Input Flexibility in U.S. Manufacturing, 1973 – 1996," ILR Review, Cornell University, ILR School, vol. 59(3), pages 386-407, April.
    • Handle: RePEc:sae:ilrrev:v:59:y:2006:i:3:p:386-407
    DOI: 10.1177/001979390605900303
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    References listed on IDEAS

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    1. Magnani, Elisabetta & Prentice, David, 2003. "Did globalization reduce unionization? Evidence from US manufacturing," Labour Economics, Elsevier, vol. 10(6), pages 705-726, December.
    2. Blackorby, Charles & Russell, R Robert, 1989. "Will the Real Elasticity of Substitution Please Stand Up? (A Comparison of the Allen/Uzawa and Morishima Elasticities)," American Economic Review, American Economic Association, vol. 79(4), pages 882-888, September.
    3. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    4. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
    5. John Shea, 1997. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 348-352, May.
    6. Subhash C. Sharma, 2002. "The Morishima Elasticity of Substitution for the Variable Profit Function and the Demand for Imports in the United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 115-135, February.
    7. Freeman, Richard B & Medoff, James L, 1982. "Substitution between Production Labor and Other Inputs in Unionized and Nonunionized Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 220-233, May.
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    Cited by:

    1. Donatella Cavagnoli, 2008. "Addiction to work: An Inelastic Wage Elasticity of Labour Supply Equals Long Hours of Work," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(2), pages 129-147.
    2. Michael Knoblach & Fabian Stöckl, 2020. "What Determines The Elasticity Of Substitution Between Capital And Labor? A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 847-875, September.
    3. Jack Kleinhenz & Russ Smith, 2011. "Regional Competitiveness: Labor-Management Relations, Workplace Practices, and Workforce Quality," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 46(2), pages 111-124, April.
    4. Samantha Farmakis‐Gamboni & David Prentice, 2011. "When Does Reducing Union Bargaining Power Increase Productivity? Evidence from the Workplace Relations Act," The Economic Record, The Economic Society of Australia, vol. 87(279), pages 603-616, December.
    5. Laura Padilla Angulo, 2013. "Labour inputs substitution during corporate restructuring: a translog model approach for US freight railroads," Applied Economics, Taylor & Francis Journals, vol. 45(18), pages 2547-2562, June.
    6. Tsakiridis, Andreas & Hanrahan, Kevin & Breen, James & Wallace, Michael & O’Donoghuea, Cathal, 2016. "Feed substitution and economies of scale in Irish beef production systems," 149th Seminar, October 27-28, 2016, Rennes, France 244769, European Association of Agricultural Economists.
    7. Samantha Farmakis-Gamboni & David Prentice, 2007. "Does Reducing Union Bargaining Power Increase Productivity?," Working Papers 2007.04 EDIRC Provider-In, School of Economics, La Trobe University.

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