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Unionization and Cost of Production: Compensation, Productivity, and Factor-Use Effects

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  • Eberts, Randall W
  • Stone, Joe A

Abstract

Unionization affects costs of production through compensation premia, technology shifts, and deviations from the least-cost combination of inputs. The first two are familiar, but the last is not. This article distinguishes the three effects, illustrates the factor-use effect, and suggests that it may resolve several apparent inconsistencies: union-induced cost effects appear larger than those implied by union compensation and productivity differentials; union compensation and productivity differentials suggest a larger effect on labor intensity of output than is observed; and employers complain that union work rules reduce productivity when there is little evidence that this is so. Copyright 1991 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): 9 (1991)
Issue (Month): 2 (April)
Pages: 171-85

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Handle: RePEc:ucp:jlabec:v:9:y:1991:i:2:p:171-85

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

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Cited by:
  1. Elisabetta Magnani & David Prentice, 2000. "Unionisation, short-run flexibility and cost efficiency: Evidence from U.S. manufacturing," Working Papers 2000.04, School of Economics, La Trobe University.
  2. Randall W. Eberts & Kevin Hollenbeck & Joe A. Stone, . "Teacher Performance Incentives and Student Outcomes," Upjohn Working Papers and Journal Articles rwekhjs2002, W.E. Upjohn Institute for Employment Research.

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