Unionisation structures, productivity, and firm performance

Sebastian Braun

No 2009-027, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: This paper studies how different unionisation structures affect firm productivity, firm performance, and consumer welfare in a monopolistic competition model with heterogeneous firms and free entry. While centralised bargaining induces tougher selection among hetero- geneous producers and thus increases average productivity, firm-level bargaining allows less productive entrants to remain in the market. Centralised bargaining also results in higher average output and profit levels than either decentralised bargaining or a competitive labour market. From a welfare perspective, the choice between centralised and decentralised bar- gaining involves a potential trade-off between product variety and product prices. Extending the model to a two-country setup, I furthermore show that the positive effect of centralised bargaining on average productivity can be overturned when firms face international low-wage competition.

Keywords: Trade Unions; Productivity; Firm Performance; International Competition (search for similar items in EconPapers)
JEL-codes: D43 F16 J50 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb649:sfb649dp2009-027

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