A dynamic model of public sector employer response to unionization

We model the response of public sector employers to unionization using the response of public school boards to teacher unionization as an example. While it is generally believed that public sector employers pay unionized workers more than nonunion workers, there is less consensus about where the money comes from. We model two cases which are possible employer reactions to unionization: re-allocating resources among types of expenditures and modifying the way in which services are provided. The model contains a political equilibrium that determines the union’s preferences and an economic equilibrium that reflects labor market conditions. We compare the predictions of the two cases regarding the effect of unionization on wages, turnover, allocation of expenditures, and productivity. We interpret existing empirical research on public sector unionization in light of these predictions and make recommenda-tions for future empirical work.     

The effect of unionization on labor productivity: Some time-series evidence

This paper presents evidence concerning the effect of unionization on the average productivity of labor using time-series data from the private, domestic sector of the U.S. economy over the 1948–73 period. Aggregate technology is specified by a constant-returns-to-scale, Cobb-Douglas production function which incorporates union and nonunion labor and proxies for both embodied and disembodied technical change. Maximum likelihood estimates of the model indicate that union membership significantly decreased average labor productivity, holding constant the quality and mix of capital and labor and controlling for cyclical effects. I thank John Addison, Maxim Engers, Barry Hirsch, William Johnson, Duane Leigh, Roger Sherman, and Jonathan Skinner for helpful comments on an earlier version of this paper. Of course, responsibility for remaining errors is mine.     

The impact of unionization,right-to-work laws,and female labor force participation on earnings inequality across states

This study examines the effect of unionization, right-to-work laws, and participation of women in the labor force on income inequality. Two distinct models are developed using 1970 and 1980 census data on the 50 states in the U.S. First, an income inequality model is specified as a beta distribution of the second kind to estimate Gini measures of income inequality. Second, these Gini estimates are used in a simultaneous equations model. The 1970 results indicate that higher unionization rates decreased inequality while right-to-work laws increased inequality. In 1980, the measure of inequality was lower in states with higher female labor force participation. We thank an unknown referee and the editor for comments and criticisms that greatly improved the paper. The usual caveat applies.     

OUTSOURCING AND UNIONIZATION: A TALE OF MISALLOCATED (RESISTANCE) RESOURCES

While many believe the growth in outsourcing contributed to the decline in U.S. unionization up to the 1990s, this argument has never been investigated systematically. In this article, we analyze the effect of outsourcing on unionization between 1973 and 1993. Instrumental variables estimation shows outsourcing contributes to higher quasirents and industry productivity. We find the union wage premium increases with the extent of outsourcing—both for workers that are substitutable by outsourcing services and workers in jobs that are not substitutes of the tasks being outsourced. Finally, we find no support for the claim that outsourcing reduces unionization. (JEL J5, L2, L6)     

A simultaneous-equations model of the relationship between public sector bargaining legislation and unionization

This paper estimates a simultaneous-equations model with public sector bargaining laws and union membership treated as jointly-determined variables. The extent of public sector unionization has a significant positive influence on the passage of prolabor bargaining legislation and bargaining legislation has strong, independent effects on the extent of public sector unionization. We gratefully acknowledge the research support provided by Minbo Kim and Parisun Chantonahom.     

The impact of unionization on the entry of firms: Evidence from U.S. industries

Traditional models of entry-deterrence typically emphasize sunk costs or predatory pricing, but unionization might also discourage potential entrants. This paper explores this possibility through an empirical model of entry that includes unionization as an explanatory variable. We find that unionization has a statistically significant entry-deterring effect.     

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.     

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.     

LABOR'S SHARE,THE FIRM'S MARKET POWER,AND TOTAL FACTOR PRODUCTIVITY

We investigate the relationship between labor's share, firm's market power, and the elasticity of output with respect to labor input using an approach based on an unobserved components model. The approach yields time‐varying estimates of market power and the elasticity. Evidence on the market power of firms (which we find to be rising since 2000) gives a deeper understanding of movements in labor's share and the labor wedge. The generated values of the elasticity yield revised estimates of total factor productivity growth which is informative about the extent of the downward bias inherent in traditional estimates which use labor's share as a proxy for the elasticity. (JEL O47, C32, E25)     

Direct and indirect effects of unionization and government employment on fringe benefit provision

The separate influences of unionization and government employment on the provision of two major fringe benefits, pensions and health insurance, are investigated. Each influence is decomposed into a direct effect and an indirect effect through earnings. The sum of these effects often differs in size from estimates that ignore the two distinct effects. Moreover, studies that argue that both unions and governmental employees capture greater fringe benefits focus on the direct effect, yet estimates usually have not isolated this effect.     

Spillover Bias in Cross-Border Minimum Wage Studies: Evidence from a Gravity Model

This paper explores the problem of spillover bias in cross-border studies of the minimum wage using a commuter gravity model on county-level data from 2009 to 2013. Commuter flows conform to the expectations of the gravity equation, but flows across county borders are sensitive to changes in the minimum wage rate, which implies that minimum wage employment effect estimates using contiguous counties are likely to suffer from spillover bias. One way to address this bias is to include a control ring between treatment and comparison counties, although this solution may introduce biases of its own. A gravity model that includes a control ring affirms that this alternative comparison group can address this spillover bias problem.     

The effect of unionization on safety in bituminous deep mines

This article examines the impact of unionization on safety in underground coal mines. An accident causation model is used to isolate the effect of unionization from other injury rate determinants. Results indicate that union mines experience more disabling injuries per year than nonunion mines,ceteris paribus. Previous studies attributed higher union injury rates to poor nonunion reporting practices. The data examined here suggest that other factors, including the UMWA’s job bidding system, low productivity, labor characteristics, and other institutional factors contribute to high injury rates at union mines. The authors acknowledge the helpful comments of Michael G. Finn, Clark G. Ross, and C. Louise Nelson. This research grew from work funded under contract DE-AC05-760R00033 between the Department of Energy and Oak Ridge Associated Universities. The views expressed and responsibility for errors or omissions belong to the authors.     

Do HRM practices influence the desire for unionization? Evidence across workers,workplaces, and co-workers for Great Britain

We investigate the desire of nonunion workers in Great Britain to become represented by unions. Comparing our results to those from the United States, we find that workers in Great Britain are less likely to desire unionization and express lower dissatisfaction with their influence at work. The determinants of the desire for unionization are estimated controlling for a wide variety of individual and workplace variables. The roles of human resource management and employee involvement are isolated. We identify direct work-place and worker-level effects of these practices in reducing the desire for unionization and an indirect effect operating through the influence of employee relations, a major determinant of the desire for unionization. Also, we identify characteristics of co-workers that are associated with desire for unionization and examine the role information revelation may play in managerial strategies to forestall unions.     

Unionization and Income Growth of Racial Minority Immigrants in Canada: A Longitudinal Study

This study examines the effect of unionization on the labor market integration of newly arrived immigrants in Canada. We find that non‐white recent immigrants gain access to unionized jobs at a slower rate than do white recent immigrants. The effect of unionization on earnings is somewhat lower for non‐white recent immigrants than for white recent immigrants. These findings are based on growth curve modeling of longitudinal data from the Survey of Labour and Income Dynamics (SLID). Therefore, unionization does not contribute to reducing the earnings gap of non‐white recent immigrants relative to white immigrants and the native‐born.     

The effects of union membership on absence from work due to illness

A simple model of the effects of unionization on absenteeism due to illness is developed and tested. It is argued that unions lower absenteeism through providing a monopoly wage, but raise it by providing liberal sick-leave benefits. Data from the Michigan Panel Study of Income Dynamics are used to test the model. In regressions which control for human capital and demographic characteristics as well as working conditions, it is found that the net effect of unionization is to encourage absence.     

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.     

INTERNATIONAL PRICE BEHAVIOR AND THE DEMAND FOR MONEY

Oil prices, commodity prices and American monetary policy, the last operating through a variety of channels, have all figured prominently in explanations of the international inflation process in the late 1960s and early 70s. OUT major purpose in this paper is to test these various hypotheses. We do so in the context of a reduced-form rational-expectations price equation which we estimate for the United States and seven other industrial countries using quarterly data for the period 1955 through 1976.
The principal conclusion that emerges from this exercise is that movements in domestic money in these countries served as the key link in the inflation process. The factors that produced these monetary changes, however, differed among countries. Price shocks of various sorts were clearly of secondary importance.
The other important set of conclusions concerns the demand for money. In place of a traditional stock adjustment model, we used GLS with a second-order correction for autocorrelation. We believe this produced more plausible estimates of the parameters of the long-run demand function and of the adjustment process itself.     

Testing for state and local government job queues

Bivariate probit estimates with partial observability identify the factors influencing the worker’s decision to seek a state or local government job and the factors influencing the government’s decision to hire particular workers. The estimates routinely confirm the presence of a local job queue but confirm the presence of a state job queue only when the role of unionization is explicitly recognized. Our results suggest that the net benefits from local and state government employment are greater than those from private sector employment. The estimates also indicate that local governments disproportionately hire racial minorities relative to the local governments’ pool of applicants but indicate no such relationship for state governments. The authors thank Dale Belman, Jugal Ghorai, and Matt Higgins for help on this and related work. We also thank the referee and the editor for useful suggestions.     

WAGES AND EMPLOYMENT IN PUBLIC-SECTOR UNIONS

We model the politics of wage and employment determination for unionized public-sector workers who can strike. If the employment level affects the identity of the decisive voter in budget referenda and other elections, then unions may be able to increase wages by increasing employment. We identify conditions under which public sector unionization will lead to increased wages and employment; we also show that a majority of voters may favor unionization. (JEL 545, J51, H4)     

Membership and wage impact of right-to-work laws

This paper examines the effects of “Right-to-Work” laws on union membership and on the earnings of union and nonunion members. Using regression analysis, we find that once the simultaneous equations bias between the degree of unionization and RTW laws is eliminated, RTW laws have no statistically significant influence on union membership. Similarly, using a human-capital earnings model, we find that RTW laws have no significant influence on the wages of all workers, union workers, or nonunion workers. However, we did find evidence that such laws may promote aggressive union wage policies resulting in a larger union/nonunion relative wages advantage in RTW states than in non-RTW states.