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Branching of banks and union decline

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  • Alexey Levkov

Abstract

This paper proposes a novel explanation for the decline in unions in the United States since the late 1970s: state-by-state removal of geographical restrictions on branching of banks. Bank branch deregulation reduces union membership in the non-banking sectors by intensifying entry of new firms, especially in sectors with high dependence on external finance. New firm entry, in turn, is associated with a reduction in union wage premium, and subsequently leads to adverse union voting. I provide empirical evidence for these channels using repeated cross-sectional and panel data of U.S. workers and union representation election outcomes.

Suggested Citation

  • Alexey Levkov, 2010. "Branching of banks and union decline," Supervisory Research and Analysis Working Papers QAU10-7, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbqu:qau10-7
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    Branch banks; Labor unions;

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