Wages,productivity, and costs in union and nonunion hospitals

This paper considers the effects of labor unions on the economic performance of hospitals. Two data sets are considered. The first includes 275 hospitals from 13 urban areas; the second includes 114 hospitals from Ohio. The analysis is designed to determine whether or not union-induced productivity improvements occur within the rather noncompetitive hospital market and questions whether or not there are cost differences between union and nonunion hospitals. On the question of productivity, both data sets indicate that positive effects occur in the hospital sector. The answer to the second question is less clear. The primary data set indicates that unionized hospitals actually have lower costs than their nonunion counterparts, while the Ohio sample indicates that unionized hospital costs are lower, but not significantly so. The author wishes to thank Donald R. Williams and an anonymous referee for their valuable comments.