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Labor union beyond borders: How customer unionization reshapes supplier labor strategies

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  • Cui, Di
  • Ding, Mingfa
  • Han, Yikai
  • Shen, Mi

Abstract

This paper examines how unionization at customer firms reshape labor strategies upstream. Using Chinese suppliers to U.S. customers and a regression discontinuity design, we show that customer unionization prompts suppliers to substitute away from formal employment: surplus labor falls, overtime and average wages decline, and labor outsourcing rises. Suppliers also reorient sales from the U.S. toward China’s domestic market. These adjustments reduce costs and boost profits for up to two years, but gains reverse thereafter as these measures prove unsustainable. These results support the uncertainty channel of unionization, showing that suppliers adapt flexible employment in response to unionization-induced uncertainty.

Suggested Citation

  • Cui, Di & Ding, Mingfa & Han, Yikai & Shen, Mi, 2025. "Labor union beyond borders: How customer unionization reshapes supplier labor strategies," Economics Letters, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525004951
    DOI: 10.1016/j.econlet.2025.112658
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    Keywords

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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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