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Are Unions Detrimental to Innovation? Theory and Evidence

Author

Listed:
  • Berton, Fabio

    (University of Turin)

  • Dughera, Stefano

    (University Paris Ouest-Nanterre)

  • Ricci, Andrea

    (INAPP – Institute for Public Policy Analysis)

Abstract

In this paper we study the effect of unions on product and process innovation both theoretically and empirically. We propose a Cournot duopoly model where labor productivity is allowed to differ across unionized and non-unionized sectors due to collective voice mechanism. Our findings suggest that the traditional hold-up view whereby unions discourage innovation does not necessarily survive. When the voice effect is neither too strong nor too low, the unionized sector outperforms the market in terms of process innovation, while the effect on product innovation is strictly increasing in the voice power. Our empirical analysis of a large representative sample of Italian firms supports the model's predictions in both pooled OLS, fixed effects and IV.

Suggested Citation

  • Berton, Fabio & Dughera, Stefano & Ricci, Andrea, 2021. "Are Unions Detrimental to Innovation? Theory and Evidence," IZA Discussion Papers 14102, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp14102
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    More about this item

    Keywords

    labor-unions; innovation;

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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