Are Unions Detrimental to Innovation? Theory and Evidence

Fabio Berton, Stefano Dughera and Andrea Ricci ()
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Stefano Dughera: University Paris Ouest-Nanterre
Andrea Ricci: INAPP – Institute for Public Policy Analysis

No 14102, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we study the effect of unions on product and process innovation both theoretically and empirically. We propose a Cournot duopoly model where labor productivity is allowed to differ across unionized and non-unionized sectors due to collective voice mechanism. Our findings suggest that the traditional hold-up view whereby unions discourage innovation does not necessarily survive. When the voice effect is neither too strong nor too low, the unionized sector outperforms the market in terms of process innovation, while the effect on product innovation is strictly increasing in the voice power. Our empirical analysis of a large representative sample of Italian firms supports the model's predictions in both pooled OLS, fixed effects and IV.

Keywords: labor-unions; innovation (search for similar items in EconPapers)
JEL-codes: J51 O31 O32 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2021-02
New Economics Papers: this item is included in nep-com, nep-ino, nep-lab, nep-ore and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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