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

  • Barry T. Hirsch

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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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.22.1.153
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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 22 (2008)
Issue (Month): 1 (Winter)
Pages: 153-176

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Handle: RePEc:aea:jecper:v:22:y:2008:i:1:p:153-176
Note: DOI: 10.1257/jep.22.1.153
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  4. 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.
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  7. 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.
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  17. 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 349-69, July.
  18. Barry T. Hirsch & Barbara A. Morgan, 1994. "Shareholder risks and returns in union and nonunion firms," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(2), pages 302-318, January.
  19. William T. Dickens & Jonathan S. Leonard, 1984. "Accounting For The Decline in Union Membership," NBER Working Papers 1275, National Bureau of Economic Research, Inc.
  20. 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.
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  22. 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, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
  23. 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.
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  25. 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.
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  35. 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.
  36. 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.
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