The effects of unions on productivity in a multinational manufacturing firm

This paper examines the effect of unions on productivity in 31 plants of a large multinational firm in the years 1975-82. The plants, 60% of which are unionized, all produce a similar line of products using material-intensive, labor-intensive, low-technology methods. Results obtained by estimating a production function indicate that unionization's overall effect on productivity is positive. Specific findings are that unionization increases the capital-labor ratio and improves management performance, but it also raises the absenteeism rate. A net positive effect on productivity remains even when these channels of union influence are controlled for, a result that, the author suggests, may reflect an improved labor relations climate or improved labor quality associated with unionization. (Author's abstract courtesy EBSCO.)