Investment and union certification

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Investment and union certification

Author Info

Bruce C. Fallick
Kevin A. Hassett

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Abstract

A growing body of work--both theoretical and empirical--has emphasized that unionization may be better understood as a tax on capital rather than a tax on labor. Under this "new" view, unionization unambiguously lowers investment. Using data on union certification elections, we estimate the impact of unionization on firms' investment behavior. Employing both a standard q-model and an "investment surprises" technique, we find that union certification significantly reduces investment. We find that a winning certification election has, on average, about the same effect on investment as would a 30 percentage point increase in the corporate tax.

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Publisher Info
Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 96-43.

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Date of creation: 1996
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Handle: RePEc:fip:fedgfe:96-43

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Related research
Keywords: Investments ; Taxation;

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Article
- Fallick, Bruce C & Hassett, Kevin A, 1999. "Investment and Union Certification," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 570-82, July. [Downloadable!] (restricted)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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. [Downloadable!] (restricted)
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. [Downloadable!] (restricted)

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Naercio Menezes-Filho & Helio Zylberstajn & Jose Paulo Chahad & Elaine Pazello, 2002. "Unions and the Economic Performanceof Brazilian Establishments," RES Working Papers 3157, Inter-American Development Bank, Research Department. [Downloadable!]
Addison, John T. & Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2005. "Do Works Councils Inhibit Investment?," IZA Discussion Papers 1473, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Wagner, Joachim & Schnabel, Claus & Schank, Thorsten & Addison, T. John, 2005. "Do Works Councils Inhibit Investment?," Discussion Papers 32, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics. [Downloadable!]
- John T. Addison & Thorsten Schank & Claus Schnabel & Joachim Wagner, 2007. "Do Works Councils Inhibit Investment?," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 60(2), pages 187-203, January. [Downloadable!] (restricted)
Juan Carlos Barcena & María Luz Campo, 2004. "Timing of Wage Setting When Firms Invest in R&D," IKERLANAK 200308, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I. [Downloadable!]
Other versions:
- Juan Carlos Bárcena Ruiz & María Luz Campo Corredera, 2003. "Timing of Wage Setting when Firms Invest in R&D," BILTOKI 200314, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística). [Downloadable!]
Ricardo J. Caballero, 1997. "Aggregate Investment," NBER Working Papers 6264, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Cabalero, R.J., 1997. "Aggregaete Investment," Working papers 97-20, Massachusetts Institute of Technology (MIT), Department of Economics.
- Caballero, Ricardo J., 1999. "Aggregate investment," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 12, pages 813-862 Elsevier. [Downloadable!] (restricted)
John T. Addison, 2005. "The Determinants of Firm Performance: Unions, Works Councils, and Employee Involvement/High Performance Work Practices," GEMF Working Papers 2005-03, GEMF - Faculdade de Economia, Universidade de Coimbra. [Downloadable!]
Other versions:
- John T. Addison, 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). [Downloadable!]
Thomas J. Holmes, 2006. "Geographic spillover of unionism," Staff Report 368, Federal Reserve Bank of Minneapolis. [Downloadable!]
Hirsch, Barry T., 2003. "What Do Unions Do for Economic Performance?," IZA Discussion Papers 892, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Barry T. Hirsch, 2004. "What Do Unions Do for Economic Performance?," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 415-456, July. [Downloadable!] (restricted)
Thomas J. Holmes, 2006. "Geographic Spillover of Unionism," NBER Working Papers 12025, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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). [Downloadable!]
Gavin Cameron & Chris Wallace, 2002. "Macroeconomic Performance in the Bretton Woods Era, And After," Economics Series Working Papers 130, University of Oxford, Department of Economics. [Downloadable!]
Other versions:
- 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.
John Budd & Yijiang Wang, . "Labor Policy and Investment," Working Papers 0502, Industrial Relations Center, University of Minnesota (Twin Cities Campus). [Downloadable!]

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