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Investment and Union Certification

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  • Fallick, Bruce C
  • Hassett, Kevin A

Abstract

Using data on union certification elections, the authors estimate the impact of unionization on firms' investment behavior. Employing both a standard q model and an 'investment surprises' technique, they find that union certification significantly reduces investment in the year following the election. The authors find that a winning certification election has, on average, about the same effect on investment in the year following the event as would--given the elasticity measures taken from the public finance literature--a 33 percentage-point increase in the corporate tax. The magnitude of the response in years further away from the election is less certain. Copyright 1999 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 17 (1999)
Issue (Month): 3 (July)
Pages: 570-82

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Handle: RePEc:ucp:jlabec:v:17:y:1999:i:3:p:570-82

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Web page: http://www.journals.uchicago.edu/JOLE/

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References

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  1. Jason G. Cummins & Kevin A. Hassett & R. Glenn Hubbard, 1994. "A Reconsideration of Investment Behavior Using Tax Reforms as Natural Experiments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 1-74.
  2. Machin, Stephen J & Wadhwani, Sushil, 1991. "The Effects of Unions on Organisational Change and Employment," Economic Journal, Royal Economic Society, vol. 101(407), pages 835-54, July.
  3. Addison, John T & Hirsch, Barry T, 1989. "Union Effects on Productivity, Profits, and Growth: Has the Long Run Arrived?," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 72-105, January.
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Citations

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Cited by:
  1. Calabuig, Vicente & Gonzalez-Maestre, Miguel, 2002. "Union structure and incentives for innovation," European Journal of Political Economy, Elsevier, vol. 18(1), pages 177-192, March.
  2. Thomas J. Holmes, 2006. "Geographic spillover of unionism," Staff Report 368, Federal Reserve Bank of Minneapolis.
  3. Campo Corredera, María Luz & Bárcena Ruiz, Juan Carlos, 2003. "Timing of Wage Setting when Firms Invest in R&D," IKERLANAK 2003-14, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
  4. Cabalero, R.J., 1997. "Aggregaete Investment," Working papers 97-20, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Gavin Cameron & Chris Wallace, 2002. "Macroeconomic Performance in the Bretton Woods Era and After," Oxford Review of Economic Policy, Oxford University Press, vol. 18(4), pages 479-494.
  6. John Budd & Yijiang Wang, . "Labor Policy and Investment," Working Papers 0502, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).
  7. Addison, John T., 2005. "The Determinants of Firm Performance: Unions, Works Councils, and Employee Involvement/High Performance Work Practices," IZA Discussion Papers 1620, Institute for the Study of Labor (IZA).
  8. Wagner, Joachim & Schnabel, Claus & Schank, Thorsten & Addison, John T., 2005. "Do Works Councils Inhibit Investment?," Discussion Papers 32, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  9. Naercio Menezes-Filho & Helio Zylberstajn & Jose Paulo Chahad & Elaine Pazello, 2002. "Unions and the Economic Performanceof Brazilian Establishments," Research Department Publications 3157, Inter-American Development Bank, Research Department.
  10. Chen, Yan-Shing & Chen, I-Ju, 2013. "The impact of labor unions on investment-cash flow sensitivity," Journal of Banking & Finance, Elsevier, vol. 37(7), pages 2408-2418.
  11. Addison, John T. & Heywood, John S. & Wei, Xiangdong, 2001. "Unions and Plant Closings in Britain: New Evidence from the 1990/98 WERS," IZA Discussion Papers 352, Institute for the Study of Labor (IZA).
  12. Barry T. Hirsch, 2004. "What Do Unions Do for Economic Performance?," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 415-456, July.
  13. Fang, Tony & Ge, Ying, 2012. "Unions and firm innovation in China: Synergy or strife?," China Economic Review, Elsevier, vol. 23(1), pages 170-180.

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