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Unionisation, short-run flexibility and cost efficiency: Evidence from U.S. manufacturing

Author

Listed:
  • Elisabetta Magnani

    (The University of New South Wales)

  • David Prentice

    (Department of Economics and Finance, La Trobe University)

Abstract

Flexibility is of great interest to policy makers and in the popular policy debate, unions are believed to be a main impediment to achieving it. However, these beliefs are not based on firm empirical foundations. Using a new dataset on U.S. three digit manufacturing industries from 1971 - 1994, we quantify, for the first time, Stigler's concept of output flexibility, estimate input flexibility and quantify the effects of unionisation on both. We find that on average unionisation reduces input flexibility by about 50%, raises average costs by about 3% but reduces output flexibility by just 0.35%.

Suggested Citation

  • Elisabetta Magnani & David Prentice, 2000. "Unionisation, short-run flexibility and cost efficiency: Evidence from U.S. manufacturing," Working Papers 2000.04, School of Economics, La Trobe University.
    • Handle: RePEc:ltr:wpaper:2000.04
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    File URL: http://www.latrobe.edu.au/__data/assets/pdf_file/0008/130859/2000.04.pdf
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    Keywords

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    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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