Human Resource Policies and Union-Nonunion Productivity Differences

Abstract

Many researchers in both economics departments and business schools recently have become interested in examining how much of an effect human resource decisions and policies have on firm performance. This paper surveys the literature on unionism and productivity and discusses its implications for future research on more general issues. The main focus is on (I) conclusions as to whether unions raise or lower productivity and (2) procedures used to identify the channels through which unions affect productivity. The studies of unions and productivity have documented large productivity differences between seemingly comparable union and nonunion establishments. In many cases unionism is associated with higher productivity, especially when unionized firms are in a competitive environment. However, the mechanisms responsible for union-nonunion productivity differences in each study remain poorly understood, either because detailed information on how unions affected company decisions was not available or because the available information produced inconclusive results. These conclusions suggest that human resource policies can have a very large effect on financial outcomes, but our ability to estimate the magnitude of that effect for a particular policy is currently very limited.