Labor Unions and Product Quality: A Case Study of the U.S. Airline Industry

Abstract

This paper examines the impact of labor unions on firms' quality provisions through the lens of the U.S. airline industry. Leveraging quarterly carrier-route level data on flight frequencies and on-time performance from the Bureau of Transportation Statistics from 1993 to 2019, our difference-in-differences estimates suggest that for both legacy carriers and low cost carriers, union representation is associated with a significant deterioration of product quality across different dimensions of airline quality provisions. By providing systematic product-level evidence of the product quality impact of unionization between carriers of different types, our study contributes to the understanding of airline labor unions and offers important management and policy implications.