The Effect of Unions on Employment: Evidence from an Unnatural Experiment in Uruguay

Adriana Cassoni, Steven Allen and Gaston Labadie

No 7501, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This study examines the impact of unions on wages and employment using data from Uruguay in a period where unions were banned (1973-1984), then legalized with tripartite bargaining (1984-1991) followed by industry-wide or firm-specific bargaining (1992-1997). The relationship between wages and employment shifted significantly across these periods as evidenced by - Recursive residuals show structural shifts in five of six industries with the shifts coming at the same time as the regime changes. - Wages are exogenous to employment before 1985, but not afterwards. - The wage elasticity and the employment-output elasticity fell sharply after 1984. - Unions significantly raised wages in 1985-1992, but afterwards the change in bargaining structure and increased openness led to concessions. - Starting in 1985, workers in unionized industries were less likely to be laid off than workers in nonunion industries.

JEL-codes: J5 (search for similar items in EconPapers)
Date: 2000-01
New Economics Papers: this item is included in nep-lab
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as Job Creation in Latin America and the Caribbean: Recent Trends and the Policy Challenges. Carmen Pages, Gaelle Pierre, Stefano Scarpetta (eds) 2009

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