Academic journal article Monthly Labor Review

Union Productivity Effects

Academic journal article Monthly Labor Review

Union Productivity Effects

Article excerpt

Union productivity effects

The impact of collective bargaining on productivity has been a frequent subject of debate. The question remains: do unions increase productivity and if they do will the increased productivity offset the greater compensation unionized employees receive?

In Trade Unions and Productivity: Some New Evidence on an Old Issue, Richard B. Freeman and James L. Medoff use the "production function' technique to study the relationship between unionism and productivity. They add a new variable: the fraction of the work force that is unionized. The authors of this National Bureau of Economic Research working paper use the tool in an attempt to adjust for differences in employees' skills and the amount of capital per employee. Their findings indicate a positive correlation in many sectors, particularly manufacturing and construction, between unionized workplaces and high productivity. But, this positive effect does not always hold true, particularly over time. For example, in the underground bituminous coal industry, mines with a union were notably less productive than nonunion mines in 1975, but looking back, in 1965, the unionized mines were more productive. It is the authors' view that this change was due in large part to a deterioration of industrial relations. During the early 1980's, as the union began to stabilize, productivity has again increased. …

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