Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961-1999

David Lee and Alexandre Mas

No 14709, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the effect of new unionization on firms' equity value over the 1961-1999 period using a newly assembled sample of National Labor Relations Board (NLRB) representation elections matched to stock market data. Event-study estimates show an average union effect on the equity value of the firm equivalent to a cost of at least $40,500 per unionized worker. At the same time, point estimates from a regression-discontinuity design -- comparing the stock market impact of close union election wins to close losses -- are considerably smaller and close to zero. We find a negative relationship between the cumulative abnormal returns and the vote share in support of the union, allowing us to reconcile these seemingly contradictory findings. Using the magnitudes from the analysis, we calibrate a structural "median voter" model of endogenous union determination in order to conduct counterfactual policy simulations of policies that would marginally increase the ease of unionization.

JEL-codes: J01 J08 J5 J51 (search for similar items in EconPapers)
Date: 2009-02
New Economics Papers: this item is included in nep-bec and nep-lab
Note: LS
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Citations: View citations in EconPapers (14)

Published as The Quarterly Journal of Economics (2012) 127 (1): 333-378. doi: 10.1093/qje/qjr058 First published online: January 16, 2012

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Related works:
Journal Article: Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961--1999 (2012)
Working Paper: Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961-1999 (2009)
Working Paper: Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961-1999 (2009)
Working Paper: Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961-1999 (2009)
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