IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v22y2008i1p153-176.html
   My bibliography  Save this article

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

Author

Listed:
  • Barry T. Hirsch

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.

Suggested Citation

  • Barry T. Hirsch, 2008. "Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 153-176, Winter.
  • Handle: RePEc:aea:jecper:v:22:y:2008:i:1:p:153-176 Note: DOI: 10.1257/jep.22.1.153
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.22.1.153
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. James T. Bennett & Bruce E. Kaufman, 2001. "The Future of Private Sector Unionism in the U.S," Journal of Labor Research, Transaction Publishers, vol. 22(2), pages 227-228, April.
    2. 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, pages 253-289.
    3. Barry T. Hirsch & Edward J. Schumacher, 2004. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 689-722, July.
    4. 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.
    5. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 3-26, Summer.
    6. 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 125-155, January.
    7. Timothy C. Haab, "undated". "Indifference or Misspecification? The Distributional Impact of Indifference on Dichotomous Choice Contingent Valuation," Working Papers 9714, East Carolina University, Department of Economics.
    8. Christopher R. Bollinger & Barry T. Hirsch, 2006. "Match Bias from Earnings Imputation in the Current Population Survey: The Case of Imperfect Matching," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 483-520, July.
    9. Thomas H. Klier, 2005. "Determinants of supplier plant location: evidence from the auto industry," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 2-15.
    10. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 879-907.
    11. Richard B. Freeman, 1998. "Spurts in Union Growth: Defining Moments and Social Processes," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 265-296 National Bureau of Economic Research, Inc.
    12. Addison, John T & Chilton, John B, 1998. "Self-Enforcing Union Contracts: Efficient Investment and Employment," The Journal of Business, University of Chicago Press, vol. 71(3), pages 349-369, July.
    13. John Logan, 2006. "The Union Avoidance Industry in the United States," British Journal of Industrial Relations, London School of Economics, vol. 44(4), pages 651-675, December.
    14. Peter Cramton & Joseph S. Tracy, 1998. "The Use of Replacement Workers in Union Contract Negotiations: The U.S. Experience, 1980-1989," Papers of Peter Cramton 98jole, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
    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 175-192, April.
    16. Barry T. Hirsch, 2004. "Reconsidering Union Wage Effects: Surveying New Evidence on an Old Topic," Journal of Labor Research, Transaction Publishers, vol. 25(2), pages 233-266, April.
    17. James T. Bennett & Bruce E. Kaufman, 2004. "What Do Unions Do?: A Twenty-Year Perspective," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 339-350, July.
    18. Cramton, Peter & Tracy, Joseph, 1998. "The Use of Replacement Workers in Union Contract Negotiations: The U.S. Experience, 1980-1989," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 667-701, October.
    19. John DiNardo & David S. Lee, 2004. "Economic Impacts of Unionization on Private Sector Employers: 1984-2001," NBER Working Papers 10598, National Bureau of Economic Research, Inc.
    20. William T. Dickens & Jonathan S. Leonard, 1984. "Accounting For The Decline in Union Membership," NBER Working Papers 1275, National Bureau of Economic Research, Inc.
    21. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The Skill Content of Recent Technological Change: An Empirical Exploration," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1279-1333.
    22. repec:mes:challe:v:38:y:1995:i:3:p:53-56 is not listed on IDEAS
    23. 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.
    24. 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.
    25. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, pages 39-72.
    26. Barry T. Hirsch, 2004. "What Do Unions Do for Economic Performance?," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 415-456, July.
    27. Morris M. Kleiner & Jonathan S. Leonard & Adam M. Pilarski, 2002. "How Industrial Relations Affects Plant Performance: The Case of Commercial Aircraft Manufacturing," ILR Review, Cornell University, ILR School, vol. 55(2), pages 195-218, January.
    28. Barry T. Hirsch & David A. MacPherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
    29. 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.
    30. Hirsch, Barry T, 1991. "Union Coverage and Profitability among U.S. Firms," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 69-77, February.
    31. 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.
    32. Barry T. Hirsch & Edward J. Schumacher, 1998. "Unions, Wages, and Skills," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 201-219.
    33. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-979, July.
    34. Richard B. Freeman, 2005. "From the Webbs to the Web: The Contribution of the Internet to Reviving Union Fortunes," NBER Working Papers 11298, National Bureau of Economic Research, Inc.
    35. John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
    36. John DiNardo & David S. Lee, 2004. "Economic Impacts of New Unionization on Private Sector Employers: 1984–2001," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1383-1441.
    37. Barry T. Hirsch & Barbara A. Morgan, 1994. "Shareholder Risk and Returns in Union and Nonunion Firms," ILR Review, Cornell University, ILR School, vol. 47(2), pages 302-318, January.
    38. Clark, Kim B, 1984. "Unionization and Firm Performance: The Impact on Profits, Growth, and Productivity," American Economic Review, American Economic Association, pages 893-919.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rossi, Stefano & Yun, Hayong, 2015. "What Drives Financial Reform? Economics and Politics of the State-Level Adoption of Municipal Bankruptcy Laws," CEPR Discussion Papers 10984, C.E.P.R. Discussion Papers.
    2. Greer, Mark, 2009. "Is it the labor unions' fault? Dissecting the causes of the impaired technical efficiencies of the legacy carriers in the United States," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 779-789, November.
    3. Morikawa, Masayuki, 2010. "Labor unions and productivity: An empirical analysis using Japanese firm-level data," Labour Economics, Elsevier, vol. 17(6), pages 1030-1037, December.
    4. Subhayu Bandyopadhyay & Sudeshna C. Bandyopadhyay, 2009. "Trade and Child Labor: A General Equilibrium Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, pages 5-18.
    5. Dong, Zhiqiang & Luo, Zijun & Wei, Xiahai, 2016. "Social insurance with Chinese characteristics: The role of communist party in private firms," China Economic Review, Elsevier, vol. 37(C), pages 40-51.
    6. Coen-Pirani, Daniele, 2015. "Human capital accumulation in a federation," European Economic Review, Elsevier, vol. 76(C), pages 104-124.
    7. Christian Nsiah & Chen Wu & Walter Mayer, 2012. "An analysis of US State’s export performance in the Asian Market," The Annals of Regional Science, Springer;Western Regional Science Association, pages 533-550.
    8. Hernando Zuleta & Andrew T. Young, 2011. "Golden Rules for Wages," Working Papers 10-05, Department of Economics, West Virginia University.
    9. 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.
    10. Andrew T. Young & Hernando Zuleta, 2013. "Golden Rules for Wages," DOCUMENTOS CEDE 011887, UNIVERSIDAD DE LOS ANDES-CEDE.
    11. Fernando Rios-Avila, 2017. "Unions and Economic Performance in Developing Countries: Case Studies from Latin America," REVISTA ECOS DE ECONOMÍA, UNIVERSIDAD EAFIT, vol. 21(44), pages 4-36, June.
    12. Hirsch, Barry, 2013. "An Anatomy of Public Sector Unions," IZA Discussion Papers 7313, Institute for the Study of Labor (IZA).
    13. Pierre Brochu & Louis-Philippe Morin, 2011. "Union Membership and Perceived Job Insecurity: 30 Years of Evidence from the American General social Survey," Working Papers 1106E, University of Ottawa, Department of Economics.
    14. Miguel Ricaurte, 2009. "Interindustry Wage Differences: An Empirical Review," Working Papers Central Bank of Chile 525, Central Bank of Chile.
    15. Brändle, Tobias & Baumann, Florian, 2013. "Union Bargaining and Intra-Industry Productivity Differentials: Theory and Evidence from Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79852, Verein für Socialpolitik / German Economic Association.
    16. 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).
    17. Miguel Ricaurte, 2010. "The Role of Labor Markets in Structural Change," Working Papers Central Bank of Chile 584, Central Bank of Chile.
    18. Balsmeier, Benjamin, 2017. "Unions, collective relations laws and R&D investment in emerging and developing countries," Research Policy, Elsevier, pages 292-304.
    19. Barry T. Hirsch, 2008. "Wage Gaps Large and Small," Southern Economic Journal, Southern Economic Association, vol. 74(4), pages 914-933, April.
    20. Burawoy, Michael, 2008. "The Public Turn: From Labor Process to Labor Movement," Institute for Research on Labor and Employment, Working Paper Series qt7vd7859r, Institute of Industrial Relations, UC Berkeley.
    21. Andrew T. Young & Hernando Zuleta, 2016. "Golden Rules of Wages," Southern Economic Journal, Southern Economic Association, vol. 83(1), pages 253-270, July.
    22. Liang, J. Nellie & Falato, Antonio, 2013. "Do Creditor Rights Increase Employment Risk? Evidence from Loan Covenants," Finance and Economics Discussion Series 2014-61, Board of Governors of the Federal Reserve System (U.S.).
    23. Edelman, Peter B. & Holzer, Harry J., 2013. "Connecting the Disconnected: Improving Education and Employment Outcomes Among Disadvantaged Youth," IZA Policy Papers 56, Institute for the Study of Labor (IZA).
    24. Fang, Tony & Ge, Ying, 2012. "Unions and firm innovation in China: Synergy or strife?," China Economic Review, Elsevier, vol. 23(1), pages 170-180.

    More about this item

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:22:y:2008:i:1:p:153-176. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert). General contact details of provider: http://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.