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Unions and Profitability: A Meta-Analysis

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Abstract

The effect of unions on profits continues to be an unresolved empirical issue. In this paper, meta-regression analysis is applied to the population of 45 econometric studies that report 532 estimates of the direct effect of unions on profits. We show that unions have a significant negative effect on profits, and that this effect is larger in the US. Separate meta-regression analysis is used to identify the sources of union-profit effects. Meta-analysis of 239 estimates of unions interacted with the hypothesized sources of union rents reveals that neither the market power nor the quasi-rent appropriation theories are supported by the extant studies. Analysis of the between-study heterogeneity reveals that unions have an indirect effect on factor accumulation – they depress physical capital formation and stimulate advertising expenditure. There is a clear need for additional primary research in this area.

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File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2007_01eco.pdf
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Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2007_01.

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Length: 32 pages
Date of creation: 10 Oct 2007
Date of revision:
Handle: RePEc:dkn:econwp:eco_2007_01

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