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Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?

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Author Info
Barry T. Hirsch () (Trinity University and IZA)

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Abstract

During the 1930s and 1940s, collective bargaining emerged as the workplace governance norm in much of the U.S. industrial sector. Following its peak in the 1950s, union density in the U.S. private sector fell steadily, to only 7.4 percent in 2006. Governance shifted from a formalized union norm to one of constrained managerial discretion. In competitive and dynamic economic environments, a union tax on company earnings and slow response to economic shocks combine to produce poor performance by union companies. Two industries - automotives and airlines - are used to illustrate these points. If worker-based institutions are to flourish, they must add value and permit companies to perform at levels similar to those obtained under evolving nonunion governance norms.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2930.

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Length: 30 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2930

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Related research
Keywords: labor unions; workplace governance; wages; wage premium; economic performance; membership; density; airlines; motor vehicles;

Other versions of this item:

Find related papers by JEL classification:
J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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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.:
  1. Richard B. Freeman & Edward P. Lazear, 1995. "An Economic Analysis of Works Councils," NBER Chapters, in: Works Councils: Consultation, Representation, and Cooperation in Industrial Relations, pages 27-52 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  2. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," NBER Working Papers 12167, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Alan B. Krueger & Alexandre Mas, 2004. "Strikes, Scabs, and Tread Separations: Labor Strife and the Production of Defective Bridgestone/Firestone Tires," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 253-289, April. [Downloadable!] (restricted)
    Other versions:
  4. Martin Neil Baily & Diana Farrell & Ezra Greenberg & Jan-Dirk Henrich & Naoko Jinjo & Maya Jolles & Jaana Remes, 2005. "Increasing global competition and labor productivity: lessons from the U.S. automotive industry," Proceedings, Federal Reserve Bank of San Francisco. [Downloadable!]
  5. Hirsch, Barry T. & Prasad, Kislaya, 1995. "Wage-employment determination and a union tax on capital: Can theory and evidence be reconciled?," Economics Letters, Elsevier, vol. 48(1), pages 61-71, April. [Downloadable!] (restricted)
  6. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects Of Regulation And Deregulation In Goods And Labor Markets," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 879-907, August. [Downloadable!] (restricted)
    Other versions:
  7. Hirsch, Barry T & Macpherson, David A, 2000. "Earnings, Rents, and Competition in the Airline Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 125-55, January. [Downloadable!] (restricted)
  8. Addison, John T & Chilton, John B, 1998. "Self-Enforcing Union Contracts: Efficient Investment and Employment," Journal of Business, University of Chicago Press, vol. 71(3), pages 349-69, July. [Downloadable!] (restricted)
  9. Barry T. Hirsch & David A. Macpherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(2), pages 349-354, January.
  10. David Autor & Frank Levy & Richard Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov. [Downloadable!]
    Other versions:
  11. 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)
  12. John Logan, 2006. "The Union Avoidance Industry in the United States," British Journal of Industrial Relations, Blackwell Publishers Ltd/London School of Economics, vol. 44(4), pages 651-675, December. [Downloadable!] (restricted)
  13. Richard B. Freeman & Joni Hersch & Lawrence Mishel, 2004. "Emerging Labor Market Institutions for the Twenty-First Century," NBER Books, National Bureau of Economic Research, Inc, number free04-1.
  14. John M. Abowd & Henry S. Farber, 1982. "Job queues and the union status of workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 35(3), pages 354-367, April.
  15. Neumann, George R & Rissman, Ellen R, 1984. "Where Have All the Union Members Gone?," Journal of Labor Economics, University of Chicago Press, vol. 2(2), pages 175-92, April. [Downloadable!] (restricted)
  16. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July. [Downloadable!] (restricted)
  17. Clark, Kim B, 1984. "Unionization and Firm Performance: The Impact on Profits, Growth, and Productivity," American Economic Review, American Economic Association, vol. 74(5), pages 893-919, December. [Downloadable!] (restricted)
  18. Alex Bryson & Richard B. Freeman, 2006. "Worker Needs and Voice in the US and the UK," NBER Working Papers 12310, National Bureau of Economic Research, Inc. [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.)

  1. Hirsch, Barry, 2008. "Wage Gaps Large and Small," IZA Discussion Papers 3375, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Walsh, Frank & Strobl, Eric, 2009. "Recent Trends in Trade Union Membership in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 117–138. [Downloadable!]
  3. MORIKAWA Masayuki, 2008. "What Do Japanese Unions Do for Productivity?: An Empirical Analysis Using Firm-Level Data," Discussion papers 08027, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
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