Union Bargaining Power Research Articles

Union Bargaining Power and the Amenity-Wage Tradeoff

Union Bargaining Power and the Amenity-Wage Tradeoff

Union Bargaining Power and Institutional Investors: Evidence from 20 OECD Countries, 1980–2017

This article investigates the relationship between the share of assets held by institutional investors relative to GDP and a synthetic index of union bargaining power in 20 OECD countries from 1980 to 2017. Findings from the use of fixed-effects OLS and instrumental variables regressions show that the share of assets held by institutional investors, especially insurance companies and pension funds, is correlated with a decline in union bargaining power. The authors argue that by contributing to significant changes in corporate strategies and governance through potential effects on jobs and wages, institutional investors in most OECD countries may have weakened the influence of trade unions, thereby leading to a higher decentralization of wage bargaining. Mixed evidence is found, however, when investigating the role of complementarity across institutions to explain cross-country heterogeneity.

Personal Bankruptcy Costs, Union Bargaining Power, and Capital Structure

Personal Bankruptcy Costs, Union Bargaining Power, and Capital Structure

What Do Unions Do to Work Design? Computer Use, Union Presence, and Tayloristic Jobs in Britain

The task framework has focused on employee survey data to analyze how computer use changes the content of jobs. In this article, we add another factor of work design, namely trade union presence. Using data from the UK Skills and Employment Surveys for the period 1997–2012, we find that union presence is associated with more Tayloristic jobs involving less autonomy, lower relevance of problem solving, and more control. In line with theory, the union effect moves in the opposite direction to the effect of computer use. The article has two important general implications. First, the Tayloristic/holistic distinction is an instructive dichotomy to evaluate changes in work design. Second, the presence of unions may induce managers to design jobs in Tayloristic ways in order to curb union bargaining power.

Temporary Workers and Cash Holdings

We investigate the effect of firm reliance on temporary workers on cash holdings by exploiting the quasi-natural experiment created by a temporary worker protection law in South Korea which requires firms to change a worker’s status to full-time once the worker has been employed at the firm for two years. Although the law passage increases the rigidity of labor costs, firms that relied more on temporary workers prior to the law strategically lower their cash holdings afterward. This occurs because the law passage raises the likelihood that workers not belonging to a union become union members. The negative effect of the law on cash holdings is driven by firms for whom lower cash holdings provide more credible evidence that a firm is unable to concede to union demands and by firms with lower ex-ante operating leverage. The stock prices of unionized firms which rely more on temporary workers react negatively to the law passage and stock market participants value cash holdings less highly for these firms. Lastly, we show that low cash holdings and using subcontracting are complement mechanisms that firms in South Korea use to decrease union bargaining power.

Impact of Union Bargaining Power on Incentives to Invest in Labor Savings

Impact of Union Bargaining Power on Incentives to Invest in Labor Savings

How redistributive institutions affect pay inequality and heterogeneity among top managers

Abstract In recent years, many scholars have investigated the incredible rise of executive pay and the role of institutions as moderators of this trend. We argue that a crucial problem for attempts to moderate these increases remains the heterogeneity among top managers. Redistributive institutions can better target pay inequality among management than institutions that treat all managers or companies the same. To show this, we use a novel data set of executive pay across 17 OECD countries. We compare the effect of different institutional factors: corporate and personal income taxation, union bargaining power, and regulation (shareholder protection). We find that redistributive institutions such as personal income tax and union bargaining power seem to be more effective in addressing this heterogeneity in pay and in moderating remuneration in firms with very large market value than smaller firms.

Right-to-Work Laws: Ideology and Impact

The debates about right-to-work (RTW) laws have raged for decades. Conservatives have long argued that a freedom principle prohibits employees from being required to pay dues even when a union represents them. Unions and their allies counter that RTW laws are actually intended to minimize the bargaining and political power of labor unions. This article outlines the ideology and impact of RTW laws in the United States. As constitutional challenges to fair share fees continue and state legislatures gradually pass RTW laws, there are many studies on the impact of RTW laws on wages and unionization, but the impact on politics is more mixed. This article analyzes the data nationally but also points to some conditions in which RTW laws may not have the impact that either their proponents or detractors predict. Literature on the topic has considered the following questions: ( a) whether wages and working conditions in RTW states are lower than in non-RTW states, ( b) whether such laws have the intent and effect of weakening worker-friendly candidates politically, and ( c) whether legal interpretations of agency fees or fair share fees are correct. Drawing on the literature in each of these areas, I explore areas of future research and offer conclusions about the state of the literature, as well as the public perceptions of RTW.

Union suppression and union substitution strategies of multinational enterprises in Ghana

AbstractThis article complements the literature by furthering the understanding of an ‘African dimension’ of multinational enterprise (MNE) union avoidance. The evidence suggests that MNEs engaged in both union suppression and union substitution strategies by (i) exploiting young employees' apathy to promote opposition and indifference for union organisation (evil stuff), (ii) implementing union member‐centred employee retrenchment (fear stuff), (iii) using enterprise‐level collective bargaining arrangement to suppress union bargaining power (fear and fatal stuff), (iv) exploiting the fragmented labour union environment to suppress union organisation (fatal and evil stuff) and (v) promoting individual employee voice and involvement mechanisms (sweet stuff). Although MNEs in Ghana engaged in both union suppression and union substitution strategies, they appear to particularly favour the adoption of ‘union suppression’ strategies and what might be termed as ‘corridor tactics’. Our article highlights four transitional issues underpinning the emerging success of ‘corridor tactics’ in union suppression in a less developed host country.

Price-cost margin and bargaining power in the European Union

Using firm-level data between 2004 and 2012 for 11 countries of the European Union (EU), we document the size of product and labour market imperfections within narrowly defined sectors including services which are virtually undocumented. Our findings suggest that perfect competition in both product and labour markets is widely rejected. Levels of the price-cost margin and union bargaining power tend to be higher in some service sectors depicting, however, substantial heterogeneity. Dispersion within sector and across countries tends to be higher in some services sectors assuming a less tradable nature which suggests that the single market integration is partial, particularly relaxing the assumption of perfect competition in the labour market. We report also figures for the aggregate economy and show that Eastern countries tend to depict lower product and labour market imperfections compared to other countries in the EU. Also, we provide evidence in favour of a very limited adjustment of both product and labour market imperfections following the international and financial crisis.

Labour union strategy and non-regular worker unionisation: an institutionally adjusted insider–outsider model for Japan

Japan’s unionisation rates and share of regular employees in the workforce have been in continuous decline since the 1970s. We use an insider–outsider model adjusted to Japanese employment institutions to link subjective short-term choice sets of unions with long-term institutional change. Non-regular work sets the entry conditions into the labour market, and by representing regular workers exclusively, unions protect wages and security for their members during economic downturns, without increasing involuntary unemployment at the national level. This strategy is linked to the observed expansion and diversification of non-regular work in Japan, particularly in involuntary non-regular employees who were originally seeking regular work. A rise in the non-regular worker base further reduces unionisation rates and union bargaining power, suggesting that the long-term exclusion of non-regular workers is unsustainable. We present a case study of UA Zensen, the major union federation leading non-regular worker unionisation at national level, to examine how union federations can overcome enterprise level barriers to expansion. Despite UA Zensen’s success, significant challenges to inclusive unionisation still exist, particularly in the manufacturing sector. Despite changes in union federations’ official stance in the late 1990s, the data show that non-regular workers continue to be excluded at enterprise level.

ENVIRONMENTAL POLICY AND LABOUR MARKET IMPERFECTION

ABSTRACTThis paper will set up a general equilibrium model with a distorted labour market to explore the effects of an environmental tax and union bargaining power on formal employment and the informal competitive wage. We find that when the government raises the environmental tax, both formal employment and informal competitive wage would fall. In addition, we confirm that a policy of labour market reform would increase both formal employment and the informal competitive wage.

Trade and Unemployment Revisited: Do Institutions Matter?

AbstractThis paper revisits the trade to unemployment nexus for Germany based on the estimation of a model featuring heterogeneous firms and search unemployment. We structurally estimate parameters that match the key moments of the German labour market. Our estimation and calibration are based on a single plant‐level data source, that is, the IAB establishment and worker panel. The calibration shows that trade liberalisation reduces unemployment in the long run. In our counter‐factual policy simulations, we focus on the effect of labour market policies on the trade and unemployment nexus and we explore how the magnitude of the effects differs under different bargaining regimes. Labour market institutions have stronger effects under collective bargaining. Compared with trade or the bargaining power of unions, the effect of unemployment benefits on unemployment turns out to be rather modest.

Union Bargaining Power and Product Innovation: Relevance of the Preference Function

Union Bargaining Power and Product Innovation: Relevance of the Preference Function

Testing the Effects of Striker Replacement and Employer Implementation of Final Offers on Employer and Union Bargaining Power

Many sorts of quantitative and qualitative empirical research are regularly used to answer questions related to work and workplace issues. However, some issues involving human behavior may be difficult to capture using standard empirical methods. Common barriers include access to people or information; problems with accurate or honest reporting; behavior that occurs over long periods of time; cost; and ethical barriers as to research using human subjects. Important information related to collective bargaining can be difficult to collect for all of these reasons. Participants in collective bargaining may not want outsiders present for all or critical parts of negotiations. They may not be candid about motives or actions, or they may be honest but not fully self-aware as to motives or actions. Bargaining sessions may be long and extend over months or years. In the case of gathering information about collective bargaining within the larger union-employer-employee contexts may require decades of access and involvement. As a result, costs in terms of time and funding and other issues may rule out examining certain sorts of questions using actual participants engaged in collective bargaining. Thus, one important area that would benefit from empirical research – testing the effects of law and proposals for law reform in general and collective bargaining law reform in particular – has so many of these problems that many important issues cannot be tested using standard methods. In addition, testing law reform proposals requires gathering data on actions that have not yet happened. Simulations provide one useful way to overcome many of these problems. In effect, simulations create a law reform laboratory. Of course, simulations are only useful if they are reflect reality. This article examines evidence as to participants’ actions in a simulation used to test various iterations of laws governing how collective bargaining impasses are to be resolved and whether those actions sufficiently mirror those of employer and union negotiators as to provide reliable data on the likely effects of law reform.

Testing the Effects of Striker Replacement and Employer Implementation of Final Offers on Employer and Union Bargaining Power

Some important issues affecting the workplace cannot be studied directly for a number of reasons. For example, they may subject humans to unacceptable risks; theories may be tested before investing the time and money required for a full study; or funding may be more readily available for a novel investigation after investigators can show that an issue merits study. Simulations were used to compress time and collect enough data to permit robust statistical analysis. In this case, simulations were used to compress time and collect enough data to. Simulations are not without problems, the most important of which is how accurately they capture the collective bargaining issues being studied. This article examines whether the views and actions of the participants in our bargaining simulations reasonably reflect the conduct of actual bargainers. It finds that the participants in the simulation did take on their assigned roles. As a result, not only can this method be useful in exploring issues such as collective bargaining, but it can also potentially be useful for other social science issues.

When Does Reducing Union Bargaining Power Increase Productivity? Evidence from the Workplace Relations Act*

Despite a large empirical literature, the conditions under which unions have different effects on productivity have not been determined. The Australian Workplace Relations Act 1996 (WRA) provides a natural experiment in which union bargaining power was decreased. We estimate productivity growth before and after the WRA. While the WRA did not increase productivity growth in union firms compared with non-union firms, in industries with more extensive unionisation, productivity growth in union firms was greater post-WRA compared with pre-WRA growth for non-union firms. This suggests unionisation tends to have greater effects on productivity in sectors where it is more extensive.

Price and Wage Setting in an Integrating Europe: Firm Level Evidence

Europe has witnessed the last decade an accelerated process of economic integration. Trade barriers were removed, the euro was introduced and ten new member states entered the European Union. Economic integration is likely to have an impact on both labor and product markets. Unlike most other papers, that focus on product and labor markets separately, we look at the link between globalization and product and labor market imperfections simultaneously. To this end, we rely on a rich panel of manufacturing firms in Belgium, a small open economy. We find that union bargaining power is higher in sectors characterized by high price cost margins. Moreover, ignoring imperfections on the labor market, leads to an underestimation of product market power. Concerning the influence of globalization, our main findings are that both price cost margins and union bargaining power are typically lower in sectors that are subject higher international competition. This result is especially true for competition from low wage countries.

Measuring Union Bargaining Power in the Estonian Public Sector

This paper analyzes the impact of trade unions on remuneration in the Estonian public sector. In this paper, union bargaining power is investigated separately in healthcare, education and culture and the public service using a case study approach. The method elaborated by the author uses documentation from branch level negotiations in the period 2001–2005. The analysis reveals that unions do have an impact on remuneration in the Estonian public sector. The influence is greater in healthcare, less in education and culture, and ambiguous in the public service where social dialogue does not really work. The most important factors of union influence turn out to be the political and legal environment (the right to strike), funding schemes and the bargaining structure (the existence and stability of an employers’ union, the number of wage levels bargained, the clarity with which parties represent their positions).

Interaction between product market and labour market power: evidence from France, Belgium and Chile

This article jointly estimates price-cost mark-ups and union bargaining power of manufacturing firms in France, Belgium and Chile. Our GMM results provide strong evidence of price-cost mark-ups being underestimated when labour market imperfections are ignored, corresponding to the omission of the part of product rents captured by the workers.