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Technical Efficiency, Unions and Decentralized Labor Contracts

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  • Devicienti, Francesco

    () (University of Turin)

  • Manello, Alessandro

    () (University of Turin)

  • Vannoni, Davide

    () (University of Turin)

Abstract

This paper explores the link between the presence of unions in the workplace, the adoption of decentralized labor agreements and technical efficiency, using a large sample of Italian manufacturing firms. We apply the Data Envelopment Analysis, and its robust version based on bootstrap theory, to get reliable estimates of technical efficiency at the firm level in a standard first stage. We devote particular attention to the specific technology adopted, by distinguishing 20 different sector frontiers, as well as to the presence of outliers. The obtained efficiency scores are analyzed in a second stage applying a truncated regression model estimated via Maximum Likelihood, following the Simar and Wilson (2007, 2011) methodology. Our results highlight that the presence of workplace unionization decreases the level of technical efficiency, while aspects limiting the unions' power such as a strong exposure to international markets, high debt levels or the prevalence of flexible assets partially reduce the negative effect. However, when firms adopt decentralized labor contracts agreements, the effect on efficiency is positive and partially compensates the negative unions' effect. The results are robust to the inclusion of many firm characteristics and to different model specifications.

Suggested Citation

  • Devicienti, Francesco & Manello, Alessandro & Vannoni, Davide, 2016. "Technical Efficiency, Unions and Decentralized Labor Contracts," IZA Discussion Papers 10292, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10292
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    Cited by:

    1. Addison, John T. & Teixeira, Paulino, 2017. "Workplace Employee Representation and Industrial Relations Performance: New Evidence from the 2013 European Company Survey," IZA Discussion Papers 10899, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    technical efficiency; trade unions; decentralized bargaining; data envelopment analysis; truncated regression model;

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory

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