Union effects on productivity,personnel practices,and survival in the automotive parts industry

We estimate the effects of unions on productivity and compensation in the automotive engine and non-ornamental body parts manufacturing industry using data obtained from a detailed questionnaire and a series of personal interviews. We find no significant union productivity effect but a significant 30 percent compensation premium in firms organized by the United Auto Workers. Individual personnel policies were shown to differ significantly in the expected manner between the union and nonunion sectors. Finally, we use data on bankrupt firms to show how the failure to correct for sample selection bias might yield upwardly biased estimates of the union productivity effect. We would like to thank Elizabeth Savoca and an anonymous referee for their helpful suggestions.     

Why unions support mandated benefits

A complete explanation for union support of mandated benefits must recognize that (1) unions promote the interests of their members primarily by restricting entry into labor markets and (2) those restrictions reduce the competitive advantage which unionized firms realize from efficiently providing fringe benefits. Only by exerting pressure on unionized firms to provide particular fringe benefits and then lobbying government to mandate those benefits at nonunion firms can unions hope to overcome a problem of their own creation.     

Exploring the contributions of human and social capital to productivity

In this article we investigate how human and social capital contribute to individual productivity. We study three firms that complete all their tasks as projects. The employees in all firms initiate and organise their projects. We collected archival data from the firms on performance, human capital, tenure, gender and their project activities. Social network data are generated from interviews and a survey. We find that social capital is the most important factor to determine productivity. We found mixed effects from human capital; only in one firm did human capital have a noticeable effect on productivity; tenure has no effects on productivity.     

Bonuses,unions, and labor productivity in South Korea

Using a set of time-series (1972–1989) and cross-sectional data on eight two-digit Korean manufacturing industries, we examine the variability of South Korea’s employee bonus system and the effect of the employee bonus on productivity. A test of the variability of the bonus showed that the bonus rate (ratio of the bonus to the wage) was positively influenced by industrial output, so the bonus is not merely a disguised wage. An augmented Cobb-Douglas production function estimation shows that the bonus has a positive and significant productivity effect. Capital-intensive and laborintensive industries did not have significantly different productivity effects due to the bonus. Lastly, Korean unions reduced labor productivity and negatively affected the productivity effect of the bonus. Also, compared with the previous period, the productivity effect of the bonus has become negative since the1987 Great Labor Offensive.     

Union decline: A view from Canada

Important changes are occurring in the Canadian unions’ political and economic environments. This paper argues that such changes may be detrimental to Canadian trade unions, given their structural and institutional situation. To support this argument, private-sector union and nonunion firms in Alberta are compared. This comparison uncovers some structural (union members’ employment patterns and union firm characteristics) and institutional (union services) attributes of unions. Combined with the politico-economic environments that Alberta unions have faced since the early 1980s, these attributes have led to a decline in union membership. Because these attributes are shared by many other Canadian unions, those unions may increasingly confront some of the same hardships currently plaguing their Alberta counterparts. I am indebted to Brian Bemmels, Alan Murray, and John G. Fricke for helpful comments on an earlier version of this paper, and to Mike Jones for his research assistance.     

Unions and productivity: Evidence from academe

In order to test competing hypotheses about the effect of unions on labor productivity, we examine research performance in a sample of 889 Ph.D.-granting departments (175 unionized) in public universities. We find no support for the hypothesis that unions enhance productivity in academe. If we compare union and nonunion departments endowed with (sample) mean amounts of labor and capital, we find that unionization is associated with a 17 percent reduction in output of published articles and a 9 percent reduction in peers’ survey evaluations of a department’s level of scholarly achievement.     

Unions and innovative activity in Germany

This study is the first attempt to investigate the influence of unions on innovative activities in Germany at the industry level. Econometric models estimated by a highly robust method and submitted to a number of specification tests indicate that trade unions do not have a negative impact on innovative activity which is measured by either the percentage of revenues spent on R&D or the percentage of employees working in R&D. This finding is consistent with evidence on the influence of unions on productivity in Germany and with considerations about the German system of industrial relations.     

Trade unions and productivity: Opening the harvard “black boxes”

Despite the now voluminous literature on unions and productivity, evidence in support of the Harvard thesis that unions can contribute to increasing productivity by giving workers a “voice” at the workplace and “shocking” management into better practices remains limited. In particular, the measurement of productivity and the empirical verification (or rejection) of the Harvard model is fraught with difficulties. This paper critically evaluates the Harvard model, in particular the neglect of union/worker objectives and management-labor relations at the workplace as they affect productivity outcomes. More detailed case study analysis is needed to explore these factors.     

Unionization and productivity in commercial banking

This paper examines the net effect of unions on productivity in the commercial banking industry. The focus of the study is on three methodological issues. First, an attempt is made to determine whether individual unions have a differential impact on banking productivity. The influence of unions on output per man-hour was initially estimated by including a union dummy variable in a Cobb-Douglas formulation of bank production. Separate binary variables were then entered into alternative specifications of the model to test the heterogeneity hypothesis. This hypothesis postulates differential productivity effects among the individual unions operating in the commercial banking sector. Second, the sample banks were paired on a case-by-case basis to assure the homogeneity of the two groupings: i.e., union and nonunion. Sample homogeneity is necessary because of the assumptions of identical production functions and output prices between the groups. Third, a complete covariance model was specified in order to estimate the impact of unionization on each parameter of the production function. In general, the unionized banks were less productive than their nonunion peers. It should be noted, however, that the standard errors were large in all the specifications. Moreover, the labor relations problems associated with one union had a large impact on the sector results.     

Privacy,technology, and conflict: Emerging issues and action in workplace privacy

IV. Conclusion Growing employee awareness of the degree to which their personal privacy is compromised in the workplace, particularly with regards to information/telecommunicatton-system use and work monitoring, has created an organizational and political climate that may yield significant restrictions on employee monitoring and on how employers maintain and distribute employees’ personal information. While both federal and state governments have generally deferred to the right of the employer-as-owner to set conditions of employment that may include intrusions into employee privacy (Grodin, 1991), a number of statutory restrictions have been promulgated or proposed that will significantly expand employee privacy rights in the workplace. Additionally, it is probable that unions will aggressively assert employee privacy rights within the context of collective bargaining, potentially using employee dissatisfaction with privacy intrusions as a basis for organizing nonunion firms.     

DOES OFFSHORING PAY? FIRM‐LEVEL EVIDENCE FROM JAPAN

This article explores the impact of offshoring on productivity using firm‐level data for the Japanese manufacturing industries during the period 1994–2000. We find that intrafirm offshoring, that is, sourcing of intermediate inputs to foreign affiliates within a particular multinational firm, has generally a positive effect on productivity of the offshoring firm, while arm’s‐length offshoring, that is, sourcing to unaffiliated foreign firms, does not have such an effect. In addition, the impact of arm’s‐length offshoring is negative for nonmultinationals and nonexporters but nonnegative for multinationals and exporters. These results suggest that the costs of searching foreign firms suitable for offshoring are nonnegligible. (JEL F14, L23)     

Information and communication technology adoption in micro and small firms: Can internet access improve labour productivity?

The rapid spread of information and communication technologies (ICT) may increase firms’ productivity with important consequences for job creation and for economic growth. This article contributes to this discussion by analysing the impact of internet adoption on labour productivity and the mechanisms shaping this relationship in Peruvian micro and small manufacturing firms over the period 2011–2013. The article estimates a reduced form where labour productivity is a function of internet adoption and other explanatory factors. Internet adoption is instrumented using a measure of the availability of financial opportunities for micro and small firms in Peru. Findings indicate that internet adoption: (a) increases firms’ labour productivity; (b) reallocates employment away from temporary administrative workers and non‐remunerated workers and expands employment of permanent production workers; (c) leads to the formalization of labour relationships, to the implementation of new organizational practices and to the improvement of training measures. While changes in employment and formalization of workers are linked to labour productivity gains, increases in training measures and organizational changes do not generate any additional productivity increase. Policies oriented to promote the adoption of ICT in micro and small firms can be beneficial to close the productivity gap with larger firms in Peru. Moreover, policies directed to the formalization of the workforce can provide an extra benefit, i.e. additional labour productivity gains in firms adopting the internet. Finally, policies oriented to the development of digital skills are also important to ease the re‐employment of those workers losing their jobs and the achievement of additional productivity gains that new organizational practices can provide.     

Strike strategies and the minimum effective union

Research has shown that in an industry-wide strike, a union must be able to reduce output “by a substantial percentage below competitive levels” to impose hardship on producers. But a union may also be effective by pursuing selective strikes. If some producers are struck while others are free to operate, then the targeted producers may bargain with the union, and holdouts can be targeted for strikes. This article analyzes the effects of selective and general strikes on both a competitive industry and a duopoly. If there are side-payments among producers, then general strikes are easier to mount. If there is no mutual aid among employers, then selective strikes are less costly to implement. It is also shown that strikes are easier to mount in a duopoly than in a competitive industry. This may contribute to union formation and collective bargaining in noncompetitive industries. The analysis is modified to allow for firms of different sizes. The results show that unions must be able to remove more output from larger firms than smaller ones, suggesting that union formation may be focused more on larger firms. The author thanks Mark Loewenstein, James Fain, and Campbell McConnell for thoughtful comments and suggestions. The author gratefully acknowledges a research grant from the College of Business Administration of the University of Nebraska. I am responsible for any remaining shortcomings.     

A model of monopoly and “efficient” unions with endogenous union coverage: Positive and normative implications

We present a model of a rent-maximizing union that organizes to increase its coverage of an industry and analyze monopoly and “efficient” unions in this setting. Our model is unique in that we allow for a competitive industry with free entry and find union and nonunion firms coexisting with product market equilibrium. This is achieved by incorporating the insight that firms are heterogeneous in productive characteristics. An important implication of our model is that an “efficient” union that covers a nontrivial share of the market is not efficient and may in fact be less efficient than a monopoly union.     

Union rents and market structure revisited

Several recent studies give conflicting evidence on whether market power associated with industry concentration is an important source of union rents. Using a 1977 sample of 327 four-digit manufacturing industries, we re-examine the issue with a regression analysis that allows for differential union effects on price-cost margins across three levels of concentration. Large and small firm as well as industry average price-cost margins are analyzed. The results reaffirm those of Hirsch and Connolly (1987), who conclude that the effect of unions on profits is independent of market structure, and thus market power is not an important source of union rents. We find that unionization: (1) reduces industry profits in all three concentration groups with statistically insignificant differential effects, and (2) has a greater negative effect on the profits of large firms than it does on the profits of small firms, regardless of the concentration category. We benefited from the comments of an anonymous referee. Any remaining errors are our own.     

L’après-communisme et le déclin du syndicalisme à l’Est : leçons de Pologne et d’ailleurs

Trade unions in Eastern Europe have declined in almost all aspects since 1989, due not just to economic restructuring but to subjective factors such as reactions to communist-era legacies and skilled workers’ animosities towards the unskilled, which made union officials themselves skeptical of the value of unions. Starting around the turn of the new century, however, five factors now favor revival: survival imperatives of the union bureaucracy, incorporation into the European Union, emerging cross-border labor solidarity, a new generation of workers, and the end of postcommunism in the firm, or the dismissal of unessential workers, which means union officials no longer need to defend the unskilled. Three obstacles, however, continue to work against union revival: ideological (continued distrust of unions), organizational (plethora of small firms), and structural (location in the global economy). Organized labor is likely to remain weak, with a few stronger unions emerging in the manufacturing sector that are more elitist, male, and less class oriented than those in the past, while unions chiefly in the public sector would flounder. Such an arrangement is not conducive to stable liberal democracy.     

Works Councils and Firm Productivity in France

This paper utilizes establishment-level data to explore the impact of works councils on firm productivity in France. A variety of empirical techniques is employed, including fixed effects and regression discontinuity designs, to identify this impact. We estimate the works council effect on productivity in union and nonunion settings, and investigate the extent to which alternative forms of worker voice and information sharing might substitute for the works council’s impact in production. We find no evidence of a positive impact of works councils on firm productivity in any of our results, and some limited evidence of a negative effect in some of the findings. There is no indication that estimated impacts on productivity vary with union status. However, a notable finding is that worker voice and information-sharing human resource practices are prevalent in French firms regardless of works council status, and are found to have positive and statistically significant effects on firm productivity.     

CORPORATE PRODUCTIVITY GROWTH: CHAMPIONS, LEADERS, AND LAGGARDS

This paper examines the relative productivity growth performance of a sample of large UK firms between 1986 and 1995. We find that superior productivity growth, however measured, is not persistent—firms with high productivity growth rates relative to (say) the average in 1 yr are as likely as not to display below-average performance in the following year. Studying the determinants of the length of time for which firms outperform their peers, we find that innovative firms carrying low debt who are relatively free from financial distress are likely to display whatever persistently superior performance we observe in the data. ( JEL D24, O33, O4)     

Intensity of management resistance: understanding the decline of unionization in the private sector

IX. Conclusions Although Lipset and Katchanovski present many of the major societal and structural causes that have influenced the decline of private sector unions, they have unfortunately omitted a factor that can account for as much as 40 percent of the decline in private sector union membership, i.e., intensity of management opposition. The managerial incentives to stop unionization are formidable because unions raise wages and reduce profits. Economic reasons for American managers to stop unionization have grown as the wage between union and nonunion workers has widened over the past 40 years especially relative to EU nations. In addition, as managerial accountability to shareholders has risen and pay related to performance has grown, top executives have attempted to raise productivity through high-performance workplace practices or lowering real wages. Since many of these practices rely on top-level executives being able to make decisions on personnel quickly without challenges from employees or due process, they have fought unions more vigorously in order to maintain this discretion over workplace decisions. Although this behavior by management may result in a more efficient allocation of resources from both a micro-and macroeconomic perspective, the losses to society occur in terms of greater income inequality and less employee voice at the workplace and in the political arena.     

The effect of unions on labor markets and economic growth: An analysis of state data

Despite voluminous research on unions, there still is no consensus on how unions affect a state's economy. Using a panel of 48 U.S. states for the 1978–1994 period, we estimate a series of simultaneous equations to analyze how unions affect various economic barometers. This provides measures for the partial correlations between unions and performance. The model is then re-estimated using regional dummies to capture fixed effects and to highlight regional differences in the slope of the Phillips curve. We find that unions adversely affect unemployment rates and the growth rates of gross state product (GSP), productivity, and population, while increasing the rate of wage inflation. The impact on the employment growth rate is negative but not significant. A test for fixed effects reveals regional differences in GSP growth. Regional differences in popu-lation growth are not significant. Also, the slope of the Phillips curve is significantly dif-ferent across regions.