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Did Lower Unionization in the United States Result in More Flexible Industries?

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  • Elisabetta Magnani
  • David Prentice

Abstract

Do unions really impede manufacturers' output flexibility? If so, in what ways? The authors propose a methodology for quantifying George Stigler's concept of output flexibility, and for decomposing the effects of unionization on average cost differences between union and non-union plants. Using a recently compiled data set on U.S. three-digit manufacturing industries from 1973 to 1996, they adapt this methodology to simulate the effects of unionization on flexibility and average costs for average-size plants. Simulation results indicate that higher unionization was associated with higher average costs and lower flexibility than low unionization. Higher average costs appear to have been primarily due to higher fixed costs, such as higher benefits.

Suggested Citation

  • Elisabetta Magnani & David Prentice, 2010. "Did Lower Unionization in the United States Result in More Flexible Industries?," ILR Review, Cornell University, ILR School, vol. 63(4), pages 662-680, July.
    • Handle: RePEc:sae:ilrrev:v:63:y:2010:i:4:p:662-680
    DOI: 10.1177/001979391006300406
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    References listed on IDEAS

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    1. Farber, Henry S, 1990. "The Decline of Unionization in the United States: What Can Be Learned from Recent Experience," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 75-105, January.
    2. Magnani, Elisabetta & Prentice, David, 2003. "Did globalization reduce unionization? Evidence from US manufacturing," Labour Economics, Elsevier, vol. 10(6), pages 705-726, December.
    3. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    4. Eaton, Adrienne E & Voos, Paula B, 1989. "The Ability of Unions to Adapt to Innovative Workplace Arrangements," American Economic Review, American Economic Association, vol. 79(2), pages 172-176, May.
    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.
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