Unionisation, short-run flexibility and cost efficiency: Evidence from U.S. manufacturing

Elisabetta Magnani and David Prentice
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Elisabetta Magnani: The University of New South Wales

No 2000.04, Working Papers from School of Economics, La Trobe University

Abstract: Flexibility is of great interest to policy makers and in the popular policy debate, unions are believed to be a main impediment to achieving it. However, these beliefs are not based on firm empirical foundations. Using a new dataset on U.S. three digit manufacturing industries from 1971 - 1994, we quantify, for the first time, Stigler's concept of output flexibility, estimate input flexibility and quantify the effects of unionisation on both. We find that on average unionisation reduces input flexibility by about 50%, raises average costs by about 3% but reduces output flexibility by just 0.35%.

Keywords: Labour Market; Workers Representation; Costs EDIRC Provider-Institution: RePEc:edi:smlatau (search for similar items in EconPapers)
JEL-codes: J5 L2 L6 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2000-06
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