Technical Efficiency, Unions and Decentralized Labor Contracts

Francesco Devicienti (), Alessandro Manello () and Davide Vannoni

No 10292, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper explores the link between the presence of unions in the workplace, the adoption of decentralized labor agreements and technical efficiency, using a large sample of Italian manufacturing firms. We apply the Data Envelopment Analysis, and its robust version based on bootstrap theory, to get reliable estimates of technical efficiency at the firm level in a standard first stage. We devote particular attention to the specific technology adopted, by distinguishing 20 different sector frontiers, as well as to the presence of outliers. The obtained efficiency scores are analyzed in a second stage applying a truncated regression model estimated via Maximum Likelihood, following the Simar and Wilson (2007, 2011) methodology. Our results highlight that the presence of workplace unionization decreases the level of technical efficiency, while aspects limiting the unions' power such as a strong exposure to international markets, high debt levels or the prevalence of flexible assets partially reduce the negative effect. However, when firms adopt decentralized labor contracts agreements, the effect on efficiency is positive and partially compensates the negative unions' effect. The results are robust to the inclusion of many firm characteristics and to different model specifications.

Keywords: data envelopment analysis; decentralized bargaining; trade unions; technical efficiency; truncated regression model (search for similar items in EconPapers)
JEL-codes: C24 C44 D22 D24 J51 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2016-10
New Economics Papers: this item is included in nep-eff and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: European Journal of Operational Research, 2017, 260 (3), 1129 - 1141

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Journal Article: Technical efficiency, unions and decentralized labor contracts (2017)
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