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Trade Unions and Productivity: Some New Evidence on an Old Issue

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  • Richard B. Freeman
  • James L. Medoff

Abstract

This paper summarized some new evidence concerning the impact of collective bargaining on productivity for workers of a given quality working with the same amount of capital. The new findings, which are based on econometric investigations, indicate that in many sectors,in particular manufacturing and construction, unionized work places are on average more productive than those that are nonunion. This positive union productivity effect is not an immutable constant. For example,in the underground bituminous coal industry, unionized mines were significantly less productive than nonunion mines in 1975 although they were significantly more productive in 1965.The routes by which unions affect productivity have not yet been carefully delineated, and they appear to differ from sector to sector. In manufacturing, reduced turnover and improved management seem to be key; in construction, better trained workers and more rationalized hiring and supervision seem to be primary. Finally, while the union/nonunion productivity differential is likely to be positive, it is on average not large enough to offset the greater compensation and capital intensity under unionism. Hence,higher productivity and lower profitability appear to go hand in hand under collective bargaining.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1249.

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Date of creation: Dec 1983
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Publication status: published as Freeman, Richard B. and James L. Medoff. "Trade Unions and Productivity: Some New Evidence on an Old Issue." Annals of the American Academy of Political and Social Science, Vol. 473, The Future of American Unionism (May, 1984): 149-164.
Handle: RePEc:nbr:nberwo:1249

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Cited by:
  1. Yannick Kalantzis & Ryo Kambayashi & S├ębastien Lechevalier, 2012. "Wage and Productivity Differentials in Japan: The Role of Labor Market Mechanisms," LABOUR, CEIS, vol. 26(4), pages 514-541, December.
  2. Dobbelaere, Sabien, 2005. "Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing," IZA Discussion Papers 1466, Institute for the Study of Labor (IZA).
  3. Joseph Gyourko & Albert Saiz, 2003. "Urban decline and housing reinvestment: the role of construction costs and the supply side," Working Papers 03-9, Federal Reserve Bank of Philadelphia.

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