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Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?

  • Hirsch, Barry

    ()

    (Georgia State University)

During the 1930s and 1940s, collective bargaining emerged as the workplace governance norm in much of the U.S. industrial sector. Following its peak in the 1950s, union density in the U.S. private sector fell steadily, to only 7.4 percent in 2006. Governance shifted from a formalized union norm to one of constrained managerial discretion. In competitive and dynamic economic environments, a union tax on company earnings and slow response to economic shocks combine to produce poor performance by union companies. Two industries – automotives and airlines – are used to illustrate these points. If worker-based institutions are to flourish, they must add value and permit companies to perform at levels similar to those obtained under evolving nonunion governance norms.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2930.

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Length: 30 pages
Date of creation: Jul 2007
Date of revision:
Publication status: published in: Journal of Economic Perspectives, 2008, 22 (1), 153-176
Handle: RePEc:iza:izadps:dp2930
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  8. Krueger, Alan B. & Mas, Alexandre, 2003. "Strikes, Scabs and Tread Separations: Labor Strife and the Production of Defective Bridgestone/Firestone Tires," IZA Discussion Papers 869, Institute for the Study of Labor (IZA).
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