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Do Unions Reduce Investment? Evidence from Canada

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  • Cameron W. Odgers
  • Julian R. Betts

Abstract

The authors test for a link between unionization and net investment rates in Canadian manufacturing. Analysis of data on 18 industries for the years 1967–87 reveals a negative non-linear relationship: the presence of unions appears to have reduced investment when the percentage of firms in the industry that were unionized was between 0% and approximately 50%, with a plateau or slight positive marginal effect above this level. In an industry moving from no unions to the mean level of unionization, net investment and gross investment are predicted to fall by 66–74% and 18–25%, respectively.

Suggested Citation

  • Cameron W. Odgers & Julian R. Betts, 1997. "Do Unions Reduce Investment? Evidence from Canada," ILR Review, Cornell University, ILR School, vol. 51(1), pages 18-36, October.
    • Handle: RePEc:sae:ilrrev:v:51:y:1997:i:1:p:18-36
    DOI: 10.1177/001979399705100102
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    References listed on IDEAS

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    7. Machin, Stephen & Wadhwani, Sushil, 1991. "The Effects of Unions of Investment and Innovation: Evidence from WIRS," Economic Journal, Royal Economic Society, vol. 101(405), pages 324-330, March.
    8. Gaudet, G O & May, J D & McFetridge, D G, 1976. "Optimal Capital Accumulation: The Neoclassical Framework in a Canadian Context," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 269-273, August.
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    1. Magali Jaoul-Grammare & Isabelle Terraz, 2013. "A Causality Analysis of Economic Growth and Union Density in European Countries," LABOUR, CEIS, vol. 27(4), pages 421-442, December.
    2. John T. Addison & Thorsten Schank & Claus Schnabel & Joachim Wagner, 2007. "Do Works Councils Inhibit Investment?," ILR Review, Cornell University, ILR School, vol. 60(2), pages 187-203, January.
    3. Hristos Doucouliagos & Patrice Laroche, 2013. "Unions and Innovation: New Insights From the Cross-Country Evidence," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(2), pages 467-491, April.
    4. John Budd & Yijiang Wang, "undated". "Labor Policy and Investment," Working Papers 0502, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).
    5. Adam Seth Litwin, 2017. "Collective Bargaining and Technological Investment: The Case of Nurses’ Unions and the Transition from Paper-Based to Electronic Health Records," British Journal of Industrial Relations, London School of Economics, vol. 55(4), pages 802-830, December.

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