Union Power, Cost of Job Loss, and Workers' Effort

Abstract

The authors hypothesize that the effectiveness of external threats in raising workers' effort is mediated by, among other labor market conditions, the presence or absence of a powerful union. In particular, they argue that because powerful unions reduce the potency of the external threat of job loss (by making it more difficult for employers to dismiss workers), the pace of work is less responsive to such a threat in strongly unionized plants than in weakly unionized plants. The results of an analysis of data from the 1990 Workplace Industrial Relations Survey in Britain support this hypothesis. The analysis also yields evidence that effort is increased where workers are rewarded individually according to results and where there are various communication channels between workers and management.