Electoral Democracy at Work

We show that an institutional change designed expressly to increase democracy for the provision of union services can have a substantial effect on unionization and employment relations. We study a French reform of 2008 that introduced mandatory elections for representation of workers at firm, industry and national levels, putting an end to the oligopoly held until then by five historically established unions. Exploiting random variation in the reform's date of application in different private sector workplaces, we find that the reform increased union membership by around 8 percentage points and employers' trust in unions by 45 percent of a standard deviation. The reform also increased workers' trust in unions, the frequency of walkouts, and it decreased voluntary resignations by about a third. In contrast, it had no effect on firms' economic or financial outcomes in the short-to-medium run. Taken together, the results suggest that regular free elections can be an effective way to foster participation in unions and workers' ability to voice concerns, while at the same time making unions more legitimate bargaining partners for employers.