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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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    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
    Date of revision:
    Handle: RePEc:fip:fedbqu:qau10-7
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    2. Guadalupe, Maria, 2005. "Product Market Competition, Returns to Skill and Wage Inequality," IZA Discussion Papers 1556, Institute for the Study of Labor (IZA).
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    4. 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.
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    6. 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.
    7. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
    8. William T. Dickens & Jonathan S. Leonard, 1984. "Accounting For The Decline in Union Membership," NBER Working Papers 1275, National Bureau of Economic Research, Inc.
    9. William Kerr & Ramana Nanda, 2006. "Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship," Harvard Business School Working Papers 07-033, Harvard Business School, revised Oct 2008.
    10. Yuliya Demyanyk, 2006. "U.S. banking deregulation and self-employment: a differential impact on those in need," Supervisory Policy Analysis Working Papers 2006-01, Federal Reserve Bank of St. Louis.
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    12. Ross Levine & Alexey Levkov & Yona Rubinstein, 2011. "Racial Discrimination and Competition," CEP Discussion Papers dp1069, Centre for Economic Performance, LSE.
    13. Thomas J. Holmes, 2006. "Geographic Spillover of Unionism," NBER Working Papers 12025, National Bureau of Economic Research, Inc.
    14. repec:tpr:qjecon:v:108:y:1993:i:4:p:983-1014 is not listed on IDEAS
    15. David Card, 1996. "Deregulation and Labor Earnings in the Airline Industry," NBER Working Papers 5687, National Bureau of Economic Research, Inc.
    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. 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.
    18. John A. Abowd & Thomas Lemieux, 1993. "The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 983-1014.
    19. 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.
    20. Sandra E. Black & Philip E. Strahan, 2001. "The Division of Spoils: Rent-Sharing and Discrimination in a Regulated Industry," American Economic Review, American Economic Association, vol. 91(4), pages 814-831, September.
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