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Branching of banks and union decline

  • Alexey Levkov
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    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.

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    File URL: http://www.bostonfed.org/bankinfo/qau/wp/2010/qau1007.htm
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    Paper provided by Federal Reserve Bank of Boston in its series Risk and Policy Analysis Unit Working Paper with number QAU10-7.

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    Date of creation: 2010
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    Handle: RePEc:fip:fedbqu:qau10-7
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    1. Demyanyk, Yuliya & Ostergaard, Charlotte & Sørensen, Bent E, 2006. "US Banking Deregulation, Small Businesses and Interstate Insurance of Personal Income," CEPR Discussion Papers 5863, C.E.P.R. Discussion Papers.
    2. Thomas J. Holmes, 2006. "Geographic Spillover of Unionism," NBER Working Papers 12025, National Bureau of Economic Research, Inc.
    3. David Card, 1996. "Deregulation and Labor Earnings in the Airline Industry," NBER Working Papers 5687, National Bureau of Economic Research, Inc.
    4. Ross Levine & Alexey Levkov & Yona Rubinstein, 2011. "Racial Discrimination and Competition," CEP Discussion Papers dp1069, Centre for Economic Performance, LSE.
    5. Donald Morgan & Bertrand Rime & Philip Strahan, 2003. "Bank Integration and State Business Cycles," NBER Working Papers 9704, National Bureau of Economic Research, Inc.
    6. Demyanyk, Yuliya, 2008. "U.S. banking deregulation and self-employment: A differential impact on those in need," Journal of Economics and Business, Elsevier, vol. 60(1-2), pages 165-178.
    7. David H. Autor & John J. Donohue & Stewart J. Schwab, 2006. "The Costs of Wrongful-Discharge Laws," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 211-231, May.
    8. Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and Innovation: An Inverted U Relationship," NBER Working Papers 9269, National Bureau of Economic Research, Inc.
    9. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
    10. L Christofides & A Oswald, 1991. "Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements," CEP Discussion Papers dp0042, Centre for Economic Performance, LSE.
    11. Kerr, William R. & Nanda, Ramana, 2009. "Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship," Journal of Financial Economics, Elsevier, vol. 94(1), pages 124-149, October.
    12. Guadalupe, Maria, 2004. "Product Market Competition, Returns to Skill and Wage Inequality," CEPR Discussion Papers 4434, C.E.P.R. Discussion Papers.
    13. William T. Dickens & Jonathan S. Leonard, 1984. "Accounting For The Decline in Union Membership," NBER Working Papers 1275, National Bureau of Economic Research, Inc.
    14. Nicola Cetorelli & Philip Strahan, 2004. "Finance as a barrier to entry: bank competition and industry structure in local U.S. markets," Working Paper Series WP-04-04, Federal Reserve Bank of Chicago.
    15. Martin Goetz, 2012. "Bank diversification, market structure and bank risk taking: theory and evidence from U.S. commercial banks," Risk and Policy Analysis Unit Working Paper QAU12-2, Federal Reserve Bank of Boston.
    16. David G. Blanchflower & Richard B. Freeman, 1990. "Going Different Ways: Unionism in the U.S. and Other Advanced O.E.C.D. Countries," NBER Working Papers 3342, National Bureau of Economic Research, Inc.
    17. John M. Abowd & Thomas Lemieux, 1991. "The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada," NBER Working Papers 3808, National Bureau of Economic Research, Inc.
    18. White, Eugene Nelson, 1982. "The Political Economy of Banking Regulation, 1864–1933," The Journal of Economic History, Cambridge University Press, vol. 42(01), pages 33-40, March.
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