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The Microeconomic Impacts of Employee Representatives: Evidence from Membership Thresholds

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  • Pedro S. Martins

Abstract

Employee representatives in firms are a potentially key but not yet studied source of the impact of unions and works councils. Their actions can shape multiple drivers of firm performance, including collective bargaining, strikes, and training. This paper examines the impact of union rep mandates by exploiting legal membership thresholds present in Portugal: for instance, while firms employing up to 49 union members are required to have one union rep, this increases to two (three) union reps for firms with 50 to 99 (100-199) union members. Drawing on matched employer-employee data on the unionised sector and regression discontinuity methods, we find that a one percentage point increase in the legal union rep/members ratio leads to an increase in firm performance of at least 7%. This result holds across multiple dimensions of firm performance and appears to be driven by increased training. However, we find no effects of union reps on firm-level wages, given the predominance of sectoral collective bargaining.

Suggested Citation

  • Pedro S. Martins, 2018. "The Microeconomic Impacts of Employee Representatives: Evidence from Membership Thresholds," Working Papers 93, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  • Handle: RePEc:cgs:wpaper:93
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    1. Hugo Vilares & Pedro Portugal & John T. Addison, 2015. "Sources of the Union Wage Gap: Results from High-Dimensional Fixed Effects Regression Models," Working Papers w201512, Banco de Portugal, Economics and Research Department.
    2. John T. Addison & Pedro Portugal & Hugo Vilares, 2017. "Unions and Collective Bargaining in the Wake of the Great Recession: Evidence from Portugal," British Journal of Industrial Relations, London School of Economics, vol. 55(3), pages 551-576, September.
    3. Thomas Breda, 2016. "Les représentants du personnel," PSE-Ecole d'économie de Paris (Postprint) halshs-01379288, HAL.
    4. Thomas Breda, 2015. "Firms' Rents, Workers' Bargaining Power and the Union Wage Premium," Economic Journal, Royal Economic Society, vol. 125(589), pages 1616-1652, December.
    5. Pedro Martins, 2009. "Rent sharing before and after the wage bill," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2133-2151.
    6. David S. Lee & Alexandre Mas, 2012. "Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961--1999," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 333-378.
    7. Aaron J. Sojourner & Brigham R. Frandsen & Robert J. Town & David C. Grabowski & Min M. Chen, 2015. "Impacts of Unionization on Quality and Productivity," ILR Review, Cornell University, ILR School, vol. 68(4), pages 771-806, August.
    8. Alexander Hijzen & Pedro S. Martins, 2016. "No Extension without Representation? Evidence from a Natural Experiment in Collective Bargaining," IMF Working Papers 2016/143, International Monetary Fund.
    9. Addison, John T. & Portugal, Pedro & Vilares, Hugo, 2015. "Unions and Collective Bargaining in the Wake of the Great Recession," IZA Discussion Papers 8943, Institute of Labor Economics (IZA).
    10. Pedro S. Martins, 2009. "Dismissals for Cause: The Difference That Just Eight Paragraphs Can Make," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 257-279, April.
    11. Lanot, Gauthier & Walker, Ian, 1998. "The union/non-union wage differential: An application of semi-parametric methods," Journal of Econometrics, Elsevier, vol. 84(2), pages 327-349, June.
    12. Erling Barth & Alex Bryson & Harald Dale-Olsen, 2017. "Union Density, Productivity, and Wages," DoQSS Working Papers 17-11, Quantitative Social Science - UCL Social Research Institute, University College London.
    13. Martins, Pedro S. & Saraiva, Joana, 2020. "Assessing the legal value added of collective bargaining agreements," International Review of Law and Economics, Elsevier, vol. 62(C).
    14. Martins, Pedro S., 2014. "30,000 Minimum Wages: The Economic Effects of Collective Bargaining Extensions," IZA Discussion Papers 8540, Institute of Labor Economics (IZA).
    15. Steffen Mueller & Jens Stegmaier, 2017. "The Dynamic Effects of Works Councils on Labour Productivity: First Evidence from Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 372-395, June.
    16. Martins, Pedro S., 2008. "Dispersion in wage premiums and firm performance," Economics Letters, Elsevier, vol. 101(1), pages 63-65, October.
    17. Pedro S. Martins, 2014. "30,000 minimum wages: The economic effects of collective agreement extensions," Working Papers 51, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
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    1. repec:cep:cverdp:027 is not listed on IDEAS
    2. Clément Brébion, 2021. "The works council wage premium in Germany: a case of strategic discrimination?," Working Papers halshs-03100169, HAL.
    3. Martins, Pedro S., 2014. "30,000 Minimum Wages: The Economic Effects of Collective Bargaining Extensions," IZA Discussion Papers 8540, Institute of Labor Economics (IZA).
    4. Martins, Pedro S., 2020. "What Do Employers' Associations Do?," IZA Discussion Papers 13705, Institute of Labor Economics (IZA).
    5. Pedro S. Martins, 2020. "Employee Training and Firm Performance: Quasi-experimental evidence from the European Social Fund," GEE Papers 0152, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jun 2020.
    6. Martins, Pedro S. & Saraiva, Joana, 2020. "Assessing the legal value added of collective bargaining agreements," International Review of Law and Economics, Elsevier, vol. 62(C).
    7. Martins, Pedro S., 2021. "Employee Training and Firm Performance: Evidence from ESF Grant Applications," IZA Discussion Papers 14153, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Firm Performance; Union Delegates; Collective Bargaining.;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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