Labor union beyond borders: How customer unionization reshapes supplier labor strategies

Di Cui, Mingfa Ding, Yikai Han and Mi Shen

Economics Letters, 2025, vol. 257, issue C

Abstract: This paper examines how unionization at customer firms reshape labor strategies upstream. Using Chinese suppliers to U.S. customers and a regression discontinuity design, we show that customer unionization prompts suppliers to substitute away from formal employment: surplus labor falls, overtime and average wages decline, and labor outsourcing rises. Suppliers also reorient sales from the U.S. toward China’s domestic market. These adjustments reduce costs and boost profits for up to two years, but gains reverse thereafter as these measures prove unsustainable. These results support the uncertainty channel of unionization, showing that suppliers adapt flexible employment in response to unionization-induced uncertainty.

Keywords: Labor unions; Supply chain; Employee overtime; Regression discontinuity design (search for similar items in EconPapers)
JEL-codes: J22 J51 M11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525004951

DOI: 10.1016/j.econlet.2025.112658

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