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The Effect of Unions on Labor Markets and Economic Growth: An Analysis of State Data

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  • LOU PANTUOSCO
  • DARRELL PARKER
  • GARY STONE
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    Abstract

    Despite voluminous research on unions, there still is no consensus on how unions affect a state's economy. Using a panel of 48 U.S. states for the 1978-1994 period, we estimate a series of simultaneous equations to analyze how unions affect various economic barometers. This provides measures for the partial correlations between unions and performance. The model is then re-estimated using regional dummies to capture fixed effects and to highlight regional differences in the slope of the Phillips curve. We find that unions adversely affect unemployment rates and the growth rates of gross state product (GSP), productivity, and population, while increasing the rate of wage inflation. The impact on the employment growth rate is negative but not significant. A test for fixed effects reveals regional differences in GSP growth. Regional differences in population growth are not significant. Also, the slope of the Phillips curve is significantly different across regions.

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    Bibliographic Info

    Article provided by Transaction Publishers in its journal Journal of Labor Research.

    Volume (Year): 22 (2001)
    Issue (Month): 1 (January)
    Pages: 195-205

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    Handle: RePEc:tra:jlabre:v:22:y:2001:i:1:p:195-205

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    Web page: http://transactionpub.metapress.com/link.asp?target=journal&id=110581

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    Cited by:
    1. Kelly Edmiston, 2005. "Worker's compensation and state employment growth," Community Affairs Research Working Paper 2005-04, Federal Reserve Bank of Kansas City.
    2. Louis J. Pantuosco & Darrell Parker, 2005. "The Determinants of Shirking: Analysis and Evidence on Job Loser Unemployment," Eastern Economic Journal, Eastern Economic Association, vol. 31(1), pages 7-21, Winter.

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