NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Can Union Labor Ever Cost Less?

Steven G. Allen

NBER Working Paper No. 2019 (Also Reprint No. r0985)
Issued in September 1986
NBER Program(s):   LS

This paper examines the effect of unions on efficiency by estimating cost function systems over three different sets of construction projects. The results show that union contractors have greater economies of scale. This gives them a cost advantage in large commercial office buildings, but in school and hospital construction, nonunion contractors have lower costs at all output levels. Despite the cost differences, profits for nonunion contractors in school and hospital construction are no higher than those for union contractors because the burden of higher union costs is shifted to buyers.

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Document Object Identifier (DOI): 10.3386/w2019

Published: Allen, Steven G. "Can Union Labor Ever Cost Less?" Quarterly Journal of Economics, Vol. 102, No. 2, May 1987, pp. 347-373.

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