The impact of unions on the economic performance of firms
This study examines the impact of unionization at the industry level and of the degree of centralization in bargaining – the industry or the firm - on wages and on the economic performance of firms within the manufacturing sector in Uruguay, using a panel of establishments for the period 1988-1995. The model, estimated using the Generalized Method of Moments, used controls for the degree of exposure to international and regional competition, and a set of industry and firm characteristics. The main findings point at unionization increasing wages and employment; promoting investment due to the firms substituting labor by capital; being organized in those plants with higher rate of profits, but promoting increases in productivity and preventing profitability increases. Given the negative effect of unionization at the industry level on the rate of growth of profitability of firms, results also suggest that unions tended to organize and to be stronger in those sectors in which extra rents were higher due to monopoly power. The evidence also points at firm-level negotiations taking into account the interests of both parties – workers and managers - so that enhanced productivity and probably survival were achieved together with lower rates of wage inflation; substitution of labor by capital and lower profits.
|Date of creation:||Dec 2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (598) 2410-6449
Fax: (598) 2410-6450
Web page: http://www.fcs.edu.uy/subcategoria.php?SubCatId=48&CatId=53
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- A. Cassoni & G. Labadie, 2001. "The outcome of different bargaining models: the effects on wages, employment and the employment mix," Documentos de Trabajo (working papers) 1401, Department of Economics - dECON.
- Dow, Gregory K, 1993. "Why Capital Hires Labor: A Bargaining Perspective," American Economic Review, American Economic Association, vol. 83(1), pages 118-34, March.
- Boal, William M & Pencavel, John, 1994. "The Effects of Labor Unions on Employment, Wages, and Days of Operation: Coal Mining in West Virginia," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 267-98, February.
- Alonso-Borrego, Cesar & Arellano, Manuel, 1999. "Symmetrically Normalized Instrumental-Variable Estimation Using Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 36-49, January.
- Rama, Martin, 1994. "Bargaining structure and economic performance in the open economy," European Economic Review, Elsevier, vol. 38(2), pages 403-415, February.
- Adriana Cassoni & Steven G. Allen & Gaston J. Labadie, 2000.
"Unions and Employment in Uruguay,"
Research Department Publications
3092, Inter-American Development Bank, Research Department.
- Sandra E. Black & Lisa M. Lynch, 1997.
"How to Compete: The Impact of Workplace Practices and Information Technology on Productivity,"
NBER Working Papers
6120, National Bureau of Economic Research, Inc.
- Sandra E. Black & Lisa M. Lynch, 2001. "How To Compete: The Impact Of Workplace Practices And Information Technology On Productivity," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 434-445, August.
- Lisa M Lynch & Sandra E Black, 2002. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," Working Papers 02-04, Center for Economic Studies, U.S. Census Bureau.
- S. Black & L. Lynch, 1997. "How to compete: the impact of workplace practices and information technology on productivity," LSE Research Online Documents on Economics 20298, London School of Economics and Political Science, LSE Library.
- S Black & L Lynch, 1997. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," CEP Discussion Papers dp0376, Centre for Economic Performance, LSE.
- Hirsch, Barry T. & Prasad, Kislaya, 1995. "Wage-employment determination and a union tax on capital: Can theory and evidence be reconciled?," Economics Letters, Elsevier, vol. 48(1), pages 61-71, April.
- Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-45, June.
- Machin, Stephen J & Wadhwani, Sushil, 1991. "The Effects of Unions on Organisational Change and Employment," Economic Journal, Royal Economic Society, vol. 101(407), pages 835-54, July.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March.
- Steven G Allen & Adriana Cassoni & Gastón J Labadie, 1996. "Wages and Employment After Reunionization in Uruguay," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 33(99), pages 277-294.
- Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence," NBER Working Papers 7081, National Bureau of Economic Research, Inc.
- Adriana Cassoni & Steven G. Allen & Gaston J. Labadie, 2000. "The Effect of Unions on Employment: Evidence from an Unnatural Experiment in Uruguay," NBER Working Papers 7501, National Bureau of Economic Research, Inc.
- Richard B. Freeman & James L. Medoff, 1979. "The Two Faces of Unionism," NBER Working Papers 0364, National Bureau of Economic Research, Inc.
- Van Reenen, John, 1994.
"The Creation and Capture of Rents: Wages and Innovation in a Panel of UK Companies,"
CEPR Discussion Papers
1071, C.E.P.R. Discussion Papers.
- Van Reenen, John, 1996. "The Creation and Capture of Rents: Wages and Innovation in a Panel of U.K. Companies," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 195-226, February.
- John M. ABOWD & Laurence ALLAIN, 1996.
"Compensation Structure and Product Market Competition,"
Annales d'Economie et de Statistique,
ENSAE, issue 41-42, pages 207-217.
- John M. Abowd & Laurence Allain, 1996. "Compensation Structure and Product Market Competition," NBER Working Papers 5493, National Bureau of Economic Research, Inc.
- Oswald, Andrew J., 1993.
"Efficient contracts are on the labour demand curve : Theory and facts,"
Elsevier, vol. 1(1), pages 85-113, June.
- Oswald, A. J., 1995. "Efficient contracts are on the labour demand curve: Theory and facts," Labour Economics, Elsevier, vol. 2(1), pages 102-102, March.
- Andrew Oswald, 1984. "Efficient Contracts are on the Labour Demand Curve: Theory and Facts," Working Papers 555, Princeton University, Department of Economics, Industrial Relations Section..
- Arellano, Manuel & Bond, Stephen, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(2), pages 277-97, April.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:ude:wpaper:1501. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Irene Musio)or (Héctor Pastori)
If references are entirely missing, you can add them using this form.