Effects Of Labor Unions Research Articles

Does unionization reduce wage inequality? New evidence from business dynamism

Incorporating the business-dynamism effect, this paper examines distribution and welfare effects of labor unions. An increase in unionization can raise the unskilled wage rate and lower the skilled wage rate in the economy, and wage inequality can be further reduced by the business-dynamism effect of firm exit. Nonetheless, the inequality-reducing role might be mitigated by the delay of firm exit caused by labor unions. In addition, the rise in unionization can solve the problem of excessive entry in the oligopolistic market, thereby improving welfare of the economy. Using multiple-country panel data, we find a negative relationship between unionization and wage inequality. This finding confirms the theoretical prediction of the inequality-reducing effect of labor unions.

노동조합이 임금프리미엄과 임금불평등에 미친 영향

This paper analyzed the effect of labor unions on wage premium and wage inequality using establishment-worker linked panel data which combines workplace panel survey from 2014 to 2019 with employment insurance data.
 First, an unconditional quantile regression methodology was used to estimate how much union wage premiums differed over the entire sample during the period. The result shows that the union raises the wage premiums of the 40th quartile wage group the most and decreases the effect toward the low wage group and especially the high wage group. It seems that union represent the economic interests of the middle and lower wage groups most.
 Estimating the relationship between the inequality index by business establishment and the unionization rate using the fixed effect, the unionization rate showed a statistically significant negative(-) relationship with all inequality indexes such as the Gini coefficient, the Tile index, the Palma ratio, and the p90/p10 quantile.
 The above estimation results imply that labor unions have had a statistically significant impact on inequality reduction in the labor market of at least the sample (business establishment with 30 or more employees), and it is necessary to consider progress in unionization as a way to improve the unequal labor market situation in the future.

Understanding Workers’ Financial Wellbeing in States with Right-to-Work Laws

As public interest in labor unions has increased in recent months, along with an increase in union representation petitions, it is valuable to understand the economic implications of labor unions. Previous empirical studies on the effects of labor unions and collective bargaining processes have focused on several economic outcomes ranging from workers' pay and productivity to firms' profitability, investments, and overall economic performance.

The Effect Of Labor Unions On Nursing Home Compliance With OSHA's Workplace Injury And Illness Reporting Requirement.

All US nursing homes are required to report workplace injury and illness data to the Occupational Safety And Health Administration (OSHA). Nevertheless, the compliance rate for US nursing homes during the period 2016-21 was only 40percent. We examined whether unionization increases the probability that nursing homes will comply with that requirement. Using a difference-in-differences design and proprietary data on union status from the Service Employees International Union for all forty-eight continental US states from the period 2016-21, we found that two years after unionization, nursing homes were 31.1percentage points more likely than nonunion nursing homes to report workplace injury and illness data to OSHA. Data on injuries occurring in specific workplaces play a central role in injury prevention. Further unionization could help improve workplace safety in nursing homes, a sector with one of the highest occupational injury and illness rates in the US.

Labour unions and corporate pension policy

The purpose of this study is to investigate the effect of labour unions on corporate pension policies. Using firm-level labour union data, it examines whether organized labour mitigates the understatement of pension liabilities on the statement of financial position. Next, we examine whether union presence affects external corporate pension funding. We find that firms with labour unions tend to report smaller actuarial gains (or larger actuarial losses) associated with the remeasurement of pension liabilities, suggesting that labour unions play a monitoring role in the reporting of corporate pension liabilities and/or that firms try to enhance their bargaining power with the labour union by exaggerating their financial burden of corporate pension liabilities. We do not find that the pension funding level (the ratio of the fair value of plan assets to pension liabilities) is higher for firms with labour unions. Overall, our results indicate that labour unions constrain management incentives to understate pension liabilities, but they have limited influence on corporate pension funding decisions.

There is power in a union? Union members' preferences and the conditional effect of labour unions on left parties in different welfare state programmes

AbstractThis article studies the effect of labour unions on policy‐making in six different parts of the welfare state (passive and active labour market policy, employment protection, old‐age pensions, health care and education) in OECD countries after 1980 with a two‐level strategy: At the micro‐level, we investigate union members’ preferences. Ordered logit regression analyses indicate that union members favour generous social policies more strongly than non‐members. Moreover, this effect is stronger for programmes closely related to the labour market than for programmes without a strong labour market link. At the macro‐level, we investigate the conditional effect of unions on left parties expecting the former to push the left towards more generous labour market‐related (but not towards less‐labour market‐related) programmes. Regression analyses essentially provide evidence for such a relationship. Overall, unions have been powerful in promoting their members’ social policy preferences via left parties in government but their power is recently vanishing.

The effect of labor unions on municipal bonds

The effect of labor unions on municipal bonds

The effect of labor unions on municipal bonds

We present three findings on the effects of local unions on the municipal bond market. First, public- and private-sector unions play differential roles in capital markets: municipal bond issuers in areas with higher public-sector union density incur higher issuance costs and lower credit ratings. Private-sector unions only affect municipal bond issuance costs if bonds are backed by tax revenues, if bonds are not insured, or if bond issuers are exposed to strong private-sector union power. Second, by employing a regression discontinuity design using local variation in the vote share of union elections, we find that closely won union elections lead to significantly higher yields on the secondary market. Third, the issuance costs of municipal bonds are further affected by state-level legislation that restricts the collective bargaining power and impedes the possibility of a strike. Overall, we conclude that union exposure is viewed as a risk factor by municipal bond market participants.

Labor Unions and Workplace Safety

The authors examine the effect of labor unions on workplace safety. For identification, they exploit the timing and outcome of union elections, using establishments in which elections narrowly fail as a comparison group for establishments in which elections narrowly pass. Data on elections come from the National Labor Relations Board, and data on workplace safety come from the Occupational Safety and Health Administration. The results indicate that unionization had no detectable effect on accident case rates at the mean, but shifted downward the case-rate distribution below 2 cases per 100 full-time equivalent workers annually. The downward shift is most evident among larger bargaining units and manufacturing establishments. Results at the higher end of case-rate distribution are inconclusive.

Labor unions and bank risk culture: evidence from the financial crisis

In this paper, we examine the effect of labor unions on bank performance during the recent financial crisis. Empirical evidence from the 314 largest global banks indicates that the stock returns and profitability of unionized banks are higher, and the default probabilities are lower than non-unionized banks. Moreover, unionized banks have lower tail risk in their stock returns, more tangible equity, more liquid assets, and better quality lending before the crisis than non-unionized banks. These finding show that unionized banks operate more conservatively and engage in less risk-taking. Our results imply that union preferences can shape the risk culture of banks.

Organized Labor and Depression in Europe: Making Power Explicit in the Political Economy of Health.

Despite engagement with the construct of power relations, research on the political economy of health has largely overlooked organized labor as a determinant of well-being. Grounded in the theory of power resources, our study aims to fill this gap by investigating the link between country-level union density and mental health while accounting for the compositional effects of individual-level union membership. We use three waves of the European Social Survey (N = 52,737) and a variation on traditional random-effects models to estimate both the contextual and change effects of labor unions on depressive symptoms. We find that country-level union density is associated with fewer depressive symptoms and that this is true irrespective of union membership. We discuss our findings vis-à-vis the literatures on the political economy of health, power resources, and fundamental causes of disease.

The impact of labor unions on corporate tax avoidance: evidence from Korea

This study examines the effect of labor unions on corporate tax avoidance activities. Labor union is an important stakeholder in terms of corporate governance; thus, managers may engage in certain accounting choices that reflect union members’ position to improve the relation with labor union. This paper empirically investigates whether managers engage in tax avoidance activities to secure financial resources for workers’ pay when the negotiation power of labor unions is higher. The empirical analysis is based on a sample of firms listed in the Korean stock market from 2001 to 2008. The authors find that companies, where labor unions are organized, have a significantly higher level of tax avoidance activities. Also, the authors attempt to examine the effect of labor unions’ bargaining power on tax avoidance. While the union membership ratio is not significantly related to tax avoidance, labor unions that belong to upper-level labor organizations significantly affect the increasing tax avoidance activity, on average. Moreover, companies that join an aggressive labor organization (‘Minju’ Federation) show a significantly higher level of tax avoidance activity, compared to those joining a moderate labor organization (‘Hanguk’ Federation). Furthermore, the authors show that such an effect of labor unions on tax avoidance is significant for companies, which are not affiliated with large business groups (‘chaebols’). This result suggests that chaebol group management is not under pressure to negotiate with union members due to higher reputation costs. The findings of this paper offer academic and practical implications that capital market participants need to understand labor unions’ effect on management’s accounting choices.

Labour unions and leverage: evidence from firm-level union data

ABSTRACT Using firm-level labour union data from Japan, this paper investigates the effect of labour unions on firm leverage. We find that as union coverage increases, both the level of and extent of change in leverage decreases. These relations remain robust when a firm falls into deficit. We also find that firms with higher union coverage have a higher interest coverage ratio. In addition, we find that firms with higher union coverage are less likely to choose issuing debt compared to issuing equity when they face financial distress. Our results imply that significant employee influence enhanced by labour unions increases fixed costs, crowds out the firm’s debt capacity and consequently reduces the firm’s leverage.

The effect of labor unions on innovation and market valuation in business group affiliations: new evidence from South Korea

This paper examines how non-financial stakeholders, especially labor unions, affect firms’ innovation in business group affiliations. Using firm-level labor union data unique to Korea, we find that firms’ innovation activities are negatively related to unionization. This negative relationship is more pronounced for large business groups, suggesting that Korean chaebols are more concerned with the influence of powerful stakeholders—union workers. Also, equity market valuation of R&D reduction under union pressure is not negative for chaebol-affiliated firms, whereas it is negative for non-affiliated firms. These results indicate that the equity market perceives that chaebols’ internal capital market facilitates group-oriented R&D investment decisions.

The Effects of Labor Unions on Investment Efficiency

The Effects of Labor Unions on Investment Efficiency

Compensation Appraisals and Labor Union Membership

Given the beneficial effects of labor unions on "bread and butter issues," union members should appraise their economic circumstances more favorably than nonunion members do. Yet, research on the anomaly of the dissatisfied union worker challenges this expectation. Using the General Social Survey's Quality of Work Life module, this article examines whether union members appraise their economic circumstances less favorably than nonunion members. Results suggest that union membership is associated with more favorable appraisal of benefits but not wages. These findings may help to provide at least a partial explanation for the anomaly of the dissatisfied union worker. Because income constitutes a vital component of job satisfaction, this study contributes more broadly to our understanding of employee well-being. It also connects the study of occupational health to that on institutions, contributes to the growing literature on the political economy of health, and highlights latent effects of union security agreements.

Labour unions and global bank loan market

ABSTRACTThis article attempts to collect a data set of labour unions in global 500 biggest banks and investigate whether labour unions of banks influence the designing of bank loan contracts. We use global syndicate loan market to examine this issue. For simplicity, banks with and without labour unions are referred to as ‘unionized banks’ and ‘nonunionized banks’, respectively. We find that unionized banks tend to loosen their lending standard in the bank loan contract: unionized banks are more likely to charge lower loan spread and favourable nonprice terms compared with nonunionized banks. Hence, our results support that unionized banks tend to lend more loans to reduce the negative effect of labour unions.

Labour Unions and Firm Productivity: Evidence from China

This study investigates the effect of labour unions on productivity across various types of firm ownership in China. Using a panel dataset of Chinese manufacturing firms covering 2004–2007 and employing propensity score matching techniques, we find that unions have a negative impact on labour productivity and total factor productivity. From a dynamic viewpoint, unionisation has an initially positive or nonsignificant association with productivity, but then has a significant negative effect in subsequent years for both foreign‐owned enterprises and private firms. A strong and negative productivity effect is consistently observed for state‐owned enterprises.

The Effect of Labor Unions on CEO Compensation

We find evidence that labor unions affect chief executive officer (CEO) compensation. First, we find that firms with strong unions pay their CEOs less. The negative effect is robust to various tests for endogeneity, including cross-sectional variations and a regression discontinuity design. Second, we find that CEO compensation is curbed before union contract negotiations, especially when the compensation is discretionary and the unions have a strong bargaining position. Third, we report that curbing CEO compensation mitigates the chance of a labor strike, thus providing a rationale for firms to pay CEOs less when facing strong unions.

Organized labor and loan pricing: A regression discontinuity design analysis

This paper provides new evidence on the effect of unionization on the cost of bank loans. By using a regression discontinuity design, we establish a causal relation between new unionization and bank loan pricing. Relative to firms in which unions barely lose elections, firms in which unions barely win elections experience an increase in the spread of the newly originated loans. Further tests suggest that the effect of labor unions on the loan spread arises through the channel of reducing the recovery rate of banks in bankruptcy rather than increasing firms' default risk.