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Are Good Industrial Relations Good for the Economy?

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  • John T. Addison
  • Paulino Teixeira

Abstract

Recent US microeconomic analysis indicates that good industrial relations might improve firm performance. Of late, it has also been claimed that the benefits of industrial relations quality - proxied inversely by a strikes variable - could also extend to the macroeconomy. Using cross-country data, we find that, independent of other labor market institutions, a lower strike volume is associated with lower unemployment. Although there is a separate line of causation running from unemployment to strikes, our analysis suggests that this is not dominant. That said, support for the notion that macro performance owes something to good industrial relations is, however, weakened once we formally control for strike endogeneity. Copyright 2009 The Authors. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd.

Suggested Citation

  • John T. Addison & Paulino Teixeira, 2009. "Are Good Industrial Relations Good for the Economy?," German Economic Review, Verein für Socialpolitik, vol. 10, pages 253-269, August.
  • Handle: RePEc:bla:germec:v:10:y:2009:i::p:253-269
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    References listed on IDEAS

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    Cited by:

    1. Allen, Matthew M.C. & Allen, Maria L., 2015. "Companies’ Access to Finance, Co-operative Industrial Relations, and Economic Growth: A Comparative Analysis of the States of South Eastern Europe," Research in International Business and Finance, Elsevier, vol. 33(C), pages 167-177.
    2. Kirsten Thommes & Agnes Akkerman & René Torenvlied & Marieke Born, 2014. "The dark side of solidarity: social norms and social relations in the aftermath of strikes," Industrial Relations Journal, Wiley Blackwell, vol. 45(4), pages 348-367, July.
    3. Thommes, Kirsten & Vyrastekova, Jana & Akkerman, Agnes, 2015. "Behavioral spillovers from freeriding in multilevel interactions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 56(C), pages 78-87.
    4. Addison, John T. & Ozturk, Orgul Demet, 2011. "Minimum Wages, Labor Market Institutions, and Female Employment," Economics Series 278, Institute for Advanced Studies.
    5. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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