The Economic Effects of Unions in Latin America: Their Impact on Wages and the Economic Performance of Firms in Uruguay

Adriana Cassoni, Gaston Labadie and Gabriela Fachola

No 3159, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: This study examines the impact of unionization and the level of centralization in bargaining, at the level of the industry or the firm, on wages and on the economic performance of firms within the manufacturing sector in Uruguay, using a panel of establishments for the period 1988 to 1995. In doing so, we control for the degree of exposure to international and regional competition as well as for industry and firm characteristics. The main findings suggest that unionization increases wages and employment and promotes investment due to firms substituting labor by capital. Unions tend to organize in those plants with highest rates of profits, but promote increases in productivity and prevent profitability increases. The mechanism at work seems to be that firms moved to more capital-intensive technologies, hence increasing the rate of growth of labor productivity and reducing that of profitability. Given the negative effect of unionization at the industry level on the rate of growth of profitability of firms, results also suggest that unions tended to organize and to be stronger in those sectors in which extra rents were higher due to monopoly power. The evidence also suggests that firm-level negotiations take into account the interests of both parties, so that enhanced productivity and probably survival were achieved together with lower rates of substitution between labor and capital and/or lower profits.

Date: 2002-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.iadb.org/research/pub_hits.cfm?pub_id=R ... le_name=pubR-466.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.iadb.org/research/pub_hits.cfm?pub_id=R-466&pub_file_name=pubR-466.pdf [301 Moved Permanently]--> https://www.iadb.org/research/pub_hits.cfm?pub_id=R-466&pub_file_name=pubR-466.pdf)

Related works:
Working Paper: The Economic Effects of Unions in Latin America: Their Impact on Wages and the Economic Performance of Firms in Uruguay (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idb:wpaper:3159

Access Statistics for this paper

More papers in Research Department Publications from Inter-American Development Bank, Research Department Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().