Trade Unions in the Production Process

Brown, Charles; Medoff, James L.

doi:10.1086/260677

Cited by 335 publications

(200 citation statements)

References 11 publications

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“…If collective bargaining in the workplace were systematically to increase productivity and not to retard growth, a strong argument could be made for policies that facilitate union organizing (this statement assumes that union-induced distortions in factor mix and economy-wide resource allocation are minor). A pathbreaking empirical study by Brown and Medoff (1978), followed by the body of evidence summarized in What Do Unions Do?, made for what appeared to many a persuasive case that collective bargaining in the U.S. is, on average, associated with substantial improvements in productivity. 16 The thesis that unions substantially increase productivity has not held up well.…”

Section: Productivity and Productivity Growth Freeman And Medoff Rigmentioning

confidence: 99%

“…Each of their explanations fits into their collective voice/institutional response framework, although in different ways. They first give prominence to the Brown and Medoff (1978) estimate that onefifth of the union productivity effect found in their study can be attributed to lower quit rates. They also emphasize Clark's (1980a) note the importance of competition, suggesting that the coal industry's deterioration in labor relations and failure to maintain productivity gains along with wage gains stems in part from limited competition in that sector.…”

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confidence: 92%

“…Freeman and Medoff summarize evidence on manufacturing studies and sector-specific studies in construction, wooden furniture, cement, and coal (1984, Table 11-1, p. 166). The strongest evidence for a large positive effect of unions on productivity comes from Brown and Medoff's (1978) rightly influential study using manufacturing industry-by-state data. Depending on one's assumption regarding capital usage, one obtains estimates of union effects on total factor productivity of either 20-25 percent or 10-15 percent.…”

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confidence: 99%

“…To fix the discussion, a variant of the CobbDouglas production function developed by Brown and Medoff (1978) is:…”

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confidence: 99%

“…The conclusion that unions in general raise productivity substantially rests almost exclusively on the results of the influential Brown and Medoff (1978) Limitations attach to the production function test and to the results in their paper, many of which were identified by Brown and Medoff. The use of value added as an output measure confounds price and quantity effects, since part of the measured union productivity differential may result from higher prices in the unionized sector.…”

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confidence: 99%

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What Do Unions Do for Economic Performance?

Hirsch

2017

What Do Unions Do?

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor, (2) internationalization of labor markets, (3) welfare state and labor market, (4) labor markets in transition countries, (5) the future of labor, (6) evaluation of labor market policies and projects and (7) general labor economics. Terms of use: Documents inIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available on the IZA website (www.iza.org) or directly from the author. This essay assesses their analysis of how unions in the U.S. private sector affect economic performance -productivity, profitability, investment, and growth. Freeman and Medoff are clearly correct that union productivity effects vary substantially across workplaces. Their conclusion that union effects are on average positive and substantial cannot be sustained, subsequent evidence suggesting an average union productivity effect near zero. Their speculation that productivity effects are larger in more competitive environments appears to hold up, although more evidence is needed. Subsequent literature continues to find unions associated with lower profitability, as noted by Freeman and Medoff. Unions are found to tax returns stemming from market power, but industry concentration is not the source of such returns. Rather, unions capture firm quasi-rents arising from long-lived tangible and intangible capital and from firm-specific advantages. Lower profits and the union tax on asset returns leads to reduced investment and, subsequently, lower employment and productivity growth. There is little evidence that unionization leads to higher rates of business failure...

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Section: Productivity and Productivity Growth Freeman And Medoff Rigmentioning

confidence: 99%

mentioning

confidence: 92%

mentioning

confidence: 99%

“…To fix the discussion, a variant of the CobbDouglas production function developed by Brown and Medoff (1978) is:…”

mentioning

confidence: 99%

mentioning

confidence: 99%

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What Do Unions Do for Economic Performance?

Hirsch

2017

What Do Unions Do?

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The effect of unions on productivity: An analysis of the cattle kill floor

McDowell

Lesser

1987

Agribusiness

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Cattle kill floor operations were analyzed using sample data to determine the impacts of unionism on productivity at the plant level. No significant union effect either negative or positive was found, possibly because of the limited union role in setting wages and the wide variation in personnel practices irrespective of the union status of the plants. Large productivity differences observed among the sample firms require other explanations.Relatively few productivity-oriented studies of the non-farm labor component of the food industry have been conducted, even though non-farm labor costs accounted for 32 cents of the US retail food dollar in 1982.' Food processing and distribution provide particularly fertile area for productivity research, as these activities in 1982, for example, contributed almost four times the value added and payroll as production agriculture. In fact, the relative labor intensity of food processing and distribution prompted Polopolus to note ". . . one of the major areas of concern of the [agricultural economics] profession should be personnel management and labor relations".* One of the most labor intensive and economically important food processing sectors is meat packing. In 1983, the industry had a wage bill of $5 billion on total sales of $50 billion. Wages and benefits are the major component of the gross margin.3 The productivity and efficiency of livestock slaughter have been the focus of a number of Time-and-motion studies have been used to estimate technical efficiency and labor requirements, and efforts have been made to identify problem areas affecting slaughter efficiency.Recently, however, issues other than technical efficiency have risen in importance as the sector has experienced rapid organizational change over the past decade. From a relatively unconcentrated but heavily unionized industry, meat packing evolved into a moderately concentrated and less unionized one. At the

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