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

David Lee, Alexandre Mas

NBER Working Paper No. 14709
Issued in February 2009
NBER Program(s):   LS

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.

download in pdf format
   (463 K)

email paper

A non-technical summary of this paper is available in the May 2009 NBER digest.  You can sign up to receive the NBER Digest by email.

This paper is available as PDF (463 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14709

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

Users who downloaded this paper also downloaded these:
DiNardo and Lee w10598 Economic Impacts of Unionization on Private Sector Employers: 1984-2001
Freeman w11410 What Do Unions Do?: The 2004 M-Brane Stringtwister Edition
Metcalf Labor Supply and Welfare Effects of a Shift from Income to Consumption Taxation
DiNardo and Hallock w7794 When Unions "Mattered": Assessing the Impact of Strikes on Financial Markets: 1925-1937
Lee and Lemieux w14723 Regression Discontinuity Designs in Economics
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us