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Union Work Rules and Efficiency in the Building Trades

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  • Allen, Steven G

Abstract

This paper estimates the effect of union work rules in the building trades on employment and costs by comparing factor demand elasticities for union and nonunion contractors and subcontractors over micro data from two different types of construction. The results show that the elasticities of substitution between labor and nonlabor inputs and own-price elasticities for nonlabor inputs are about the same for union and nonunion contractors. In contrast, the elasticities of substitution among different skill categories of labor and the own-price elasticities for each category are much lower under unionism. A simulation based on a typical office building subcontract shows that these lower factor demand elasticities result in excess staffing of 3.2 percent, excess labor costs of 5.0 percent, and excess total costs of 2.0 percent. This study also examines directly the effect of union work rules on the use of prefabricated components and finds that union contractors are justas likely to use them as nonunion contractors.
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Suggested Citation

  • Allen, Steven G, 1986. "Union Work Rules and Efficiency in the Building Trades," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 212-242, April.
  • Handle: RePEc:ucp:jlabec:v:4:y:1986:i:2:p:212-42
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    File URL: http://dx.doi.org/10.1086/298101
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    References listed on IDEAS

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    1. Steven G. Allen, 1983. "Unionization and Productivity in Office Building and School Construction," NBER Working Papers 1139, National Bureau of Economic Research, Inc.
    2. Allan B. Mandelstamm, 1965. "The Effects of Unions on Efficiency in the Residential Construction Industry: A Case Study," ILR Review, Cornell University, ILR School, vol. 18(4), pages 503-521, July.
    3. Freeman, Richard B & Medoff, James L, 1982. "Substitution between Production Labor and Other Inputs in Unionized and Nonunionized Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 220-233, May.
    4. Denny, Michael & Fuss, Melvyn A, 1977. "The Use of Approximation Analysis to Test for Separability and the Existence of Consistent Aggregates," American Economic Review, American Economic Association, vol. 67(3), pages 404-418, June.
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    Cited by:

    1. Adriana Cassoni & Steven G. Allen & Gaston J. Labadie, 2004. "Unions and Employment in Uruguay," NBER Chapters,in: Law and Employment: Lessons from Latin America and the Caribbean, pages 435-496 National Bureau of Economic Research, Inc.
    2. Peter Cappelli, 2000. "Examining the Incidence of Downsizing and Its Effect on Establishment Performance," NBER Working Papers 7742, National Bureau of Economic Research, Inc.
    3. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2015. "The own-wage elasticity of labor demand: A meta-regression analysis," European Economic Review, Elsevier, vol. 80(C), pages 94-119.
    4. Johnson, George E, 1990. "Work Rules, Featherbedding, and Pareto-optimal Union-Management Bargaining," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 237-259, January.
    5. Adriana Cassoni & Steven G. Allen & Gaston J. Labadie, 2000. "The Effect of Unions on Employment: Evidence from an Unnatural Experiment in Uruguay," NBER Working Papers 7501, National Bureau of Economic Research, Inc.
    6. Adriana Cassoni & Steven G. Allen & Gaston J. Labadie, 2000. "Sindicatos y empleo en Uruguay," Research Department Publications 3093, Inter-American Development Bank, Research Department.
    7. Daniel S. Hamermesh, 1991. "Data Difficulties in Labor Economics," NBER Chapters,in: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, pages 273-298 National Bureau of Economic Research, Inc.
    8. Adriana Cassoni, 1999. "Labour demand in Uruguay before and after re-unionisation," Documentos de Trabajo (working papers) 0199, Department of Economics - dECON.
    9. Patrice Laroche & Hristos Doucouliagos, 2009. "Unions and Profits: A meta-regression Analysis," Post-Print hal-00648569, HAL.

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