Union effects on productivity, personnel practices, and survival in the automotive parts industry

An attempt is made to estimate the effects of unions on productivity and compensation in the automotive engine and nonornamental body parts manufacturing industry. Then, the incidence of various personnel policies among the union and nonunion firms and across different unions are compared and their effects on productivity estimated. Complete survey data were collected through questionnaires and interviews; the final sample includes 37 firms. No significant union effect is found for the industry. However, the presence of the United Auto Workers (UAW) results in increases in compensation of around 33%, with no offsetting productivity effect. The analysis confirms the prediction that these firms are notably more likely to go out of business. Individual personnel policies are shown to differ significantly in the expected manner between the union and nonunion sectors. The estimated UAW productivity effect becomes more negative when attempts are made to correct for possible sample bias.