Trade Unions and Productivity: Some New Evidence on an Old Issue

Richard B. Freeman, James L. Medoff

NBER Working Paper No. 1249
Issued in December 1983
NBER Program(s):Labor Studies

This paper summarized some new evidence concerning the impact of collective bargaining on productivity for workers of a given quality working with the same amount of capital. The new findings, which are based on econometric investigations, indicate that in many sectors,in particular manufacturing and construction, unionized work places are on average more productive than those that are nonunion. This positive union productivity effect is not an immutable constant. For example,in the underground bituminous coal industry, unionized mines were significantly less productive than nonunion mines in 1975 although they were significantly more productive in 1965.The routes by which unions affect productivity have not yet been carefully delineated, and they appear to differ from sector to sector. In manufacturing, reduced turnover and improved management seem to be key; in construction, better trained workers and more rationalized hiring and supervision seem to be primary. Finally, while the union/nonunion productivity differential is likely to be positive, it is on average not large enough to offset the greater compensation and capital intensity under unionism. Hence,higher productivity and lower profitability appear to go hand in hand under collective bargaining.

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Document Object Identifier (DOI): 10.3386/w1249

Published: Freeman, Richard B. and James L. Medoff. "Trade Unions and Productivity: Some New Evidence on an Old Issue." Annals of the American Academy of Political and Social Science, Vol. 473, The Future of American Unionism (May, 1984): 149-164.

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