Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?

Barry Hirsch

No 2930, IZA Discussion Papers from IZA Network @ LISER

Abstract: During the 1930s and 1940s, collective bargaining emerged as the workplace governance norm in much of the U.S. industrial sector. Following its peak in the 1950s, union density in the U.S. private sector fell steadily, to only 7.4 percent in 2006. Governance shifted from a formalized union norm to one of constrained managerial discretion. In competitive and dynamic economic environments, a union tax on company earnings and slow response to economic shocks combine to produce poor performance by union companies. Two industries – automotives and airlines – are used to illustrate these points. If worker-based institutions are to flourish, they must add value and permit companies to perform at levels similar to those obtained under evolving nonunion governance norms.

Keywords: motor vehicles; airlines; density; membership; wage premium; economic performance; wages; workplace governance; labor unions (search for similar items in EconPapers)
JEL-codes: J2 J31 J5 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007-07
New Economics Papers: this item is included in nep-bec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Journal of Economic Perspectives, 2008, 22 (1), 153-176

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Journal Article: Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist? (2008)
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