Union Density Changes and Union Effects On Firm Performance in Peru
AbstractThe paper documents the sharp reduction in union density in Peru between 1986 and 1998, in a context of large macroeconomic fluctuations, structural reforms and changes in the Collective Bargaining Law in 1993. Using a pseudo panel of household surveys we find which worker and firm characteristics increase the likelihood of unionization in a context in which union density falls sharply. We find that a blue-collar job, a permanent contract, higher education and working in a large firm increase the likelihood of unionization, but only before the legislative change. There is evidence of a breakpoint in the reduction of union density probably related to the 1993 change in the Collective Bargaining Law. Most of the reduction in union density can be explained by within- categories decreases in union density. However, there is a small contribution stemming from the reduction in employment in the highly unionized public sector and from the increase in employment in low union density temporary and small firm employment. Using a panel of firms for the manufacturing sector for the period 1994-1996, we find a negative impact of unions on profits for all firm sizes. Within unionized firms profits are lower the higher the union density within the firm. In the econometric analysis, we find a significant negative effect even after controlling for firm and sector characteristics and firm fixed effects. There is some evidence that this effect diminishes over time, consistent with the reduction in union density during that period, but the reduction is not robust to different specifications. This impact of unions on profits is also negative and significant when we use within-firm union density. Labor productivity is negatively related to having a union in the firm, but the negative effect disappears once we control for firm characteristics.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 3158.
Date of creation: Sep 2002
Date of revision:
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.:
- Robinson, Chris, 1989. "Union Endogeneity and Self-selection," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 106-12, January.
- Machin, Stephen & Stewart, Mark, 1996.
"Trade Unions and Financial Performance,"
Oxford Economic Papers,
Oxford University Press, vol. 48(2), pages 213-41, April.
- Zvi Griliches & Jerry A. Hausman, 1984.
"Errors in Variables in Panel Data,"
NBER Technical Working Papers
0037, National Bureau of Economic Research, Inc.
- Adriana Cassoni & Steven G. Allen & Gaston J. Labadie, 2004.
"Unions and Employment in Uruguay,"
in: Law and Employment: Lessons from Latin America and the Caribbean, pages 435-496
National Bureau of Economic Research, Inc.
- Jaime Saavedra-Chanduví & Máximo Torero, 2000. "Labor Market Reforms and Their Impact on Formal Labor Demand and Job Market Turnover: The Case of Peru," Research Department Publications 3095, Inter-American Development Bank, Research Department.
- John M. Abowd & Thomas Lemieux, 1990.
"The Effects of International Competiton on Collective Bargaining Outcomes: A Comparison of the United States and Canada,"
NBER Working Papers
3352, National Bureau of Economic Research, Inc.
- John M. Abowd & Thomas Lemieux, 1991. "The Effects of International Competition on Collective Bargaining Outcomes: A Comparison of the United States and Canada," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 343-367 National Bureau of Economic Research, Inc.
- Menezes-Filho, Naercio Aquino, 1997. "Unions and Profitability over the 1980s: Some Evidence on Union-Firm Bargaining in the United Kingdom," Economic Journal, Royal Economic Society, vol. 107(442), pages 651-70, May.
- Budd, J.W. & Na, I.G., 1994.
"The Union Membership Wage Premium for Employees Covered by Collective Bargaining Agreements,"
94-09, Minnesota - Industrial Relations Center.
- Budd, John W & Na, In-Gang, 2000. "The Union Membership Wage Premium for Employees Covered by Collective Bargaining Agreements," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 783-807, October.
- Duncan, Gregory M & Leigh, Duane E, 1985. "The Endogeneity of Union Status: An Empirical Test," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 385-402, July.
- 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.
- Narjess Boubakri & Jean-Claude Cosset, 1998. "The Financial and Operating Performance of Newly Privatized Firms: Evidence from Developing Countries," Journal of Finance, American Finance Association, vol. 53(3), pages 1081-1110, 06.
- Motohiro Morishima, 1991. "Information sharing and collective bargaining in Japan: Effects on wage negotiation," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 44(3), pages 469-485, April.
- Henry S. Farber, 1984. "Right-to-Work Laws and the Extent of Unionization," NBER Working Papers 1136, National Bureau of Economic Research, Inc.
- Booth, Alison, 1986. "Estimating the Probability of Trade Union Membership: A Study of Men and Women in Britain," Economica, London School of Economics and Political Science, vol. 53(29), pages 41-61, February.
- Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-78, December.
- Machin, Stephen & Wadhwani, Sushil, 1991. "The Effects of Unions of Investment and Innovation: Evidence from WIRS," Economic Journal, Royal Economic Society, vol. 101(405), pages 324-30, March.
- Leonardo Gasparini & Hernán Winkler & Francisco Haimovich & Matías Busso, 2006. "Employability in the Southern Cone," IDB Publications 22058, Inter-American Development Bank.
- Arias, Omar & Blom, Andreas & Bosch, Mariano & Cunningham, Wendy & Fiszbein, Ariel & Lopez Acevedo, Gladys & Maloney, William & Saavedra, Jaime & Sanchez-Paramo, Carolina & Santamaria, Mauricio & Siga, 2005. "Pending issues in protection, productivity growth, and poverty reduction," Policy Research Working Paper Series 3799, The World Bank.
- Richard B. Freeman, 2009. "Labor Regulations, Unions, and Social Protection in Developing Countries: Market distortions or Efficient Institutions?," NBER Working Papers 14789, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luis Daniel Martinez).
If references are entirely missing, you can add them using this form.