Labor dynamics and unions: An empirical analysis through Okun's Law

Abstract

The understanding between labor dynamics and unions is a topic of great interest to economists and policymakers. It is known that unions can influence the working conditions of employees, either to their benefit or detriment. Using data for the G-7 countries over the period 1980–2023, the relationship between labor dynamics and unionization is examined. The association studied partly determines the collective bargaining behavior of unions. Thus, it was determined that in some cases (Italy), unions have rather rigid positions in their negotiations (positive relationship). On the contrary, unions such as the German ones show a rather flexible position (negative relationship). In addition, it was found that unions in the USA and Canada evolve towards more flexible reforms as their membership increases (positive-negative relationship). Also, the findings show how unions in some countries (Japan and UK) move from flexibility towards rigidity as they gain presence (negative-positive relationship).