union coverage and profitability among u s firms this paper utilizes unique survey data on labor union coverage at the firm level to examine union effects on the profitability of 705 u s companies during the 1970s market value and earnings are estimated to be about 10 15 percent lower in an average unionized company than in a nonunion company following extensive control for firm and industry characteristics deleterious union effects on firm profitability are sizable throughout the 1972 80 period but vary considerably across industries the relatively poor profit performance of unionized companies may help explain the recent decline in u s union membership the author thanks the w e upjohn institute for employment research for financial support elizabeth gregory for assistance with the union coverage survey zvi griliches for providing access to the rd donald deere terry seaks and anonymous referees for helpful suggestions and seminar participants at connecticut florida state harvard texas a m and william and mary for comments on earlier versions of this research

internal rent capture and the profit concentration relation if labor is able to capture a portion of the economic rents in profitable industries industry profitability and the relation between market structure and profitability may both be mismeasured this paper estimates a simultaneous equation system in which both the price cost margin and compensation per worker including fringe benefits are endogenous variables the authors sample consists of eighty five well defined producer goods industries they find that labor compensation does include some capture of economic rents further when they correct for this rent capture the relation between market concentration and the price cost margin is strengthened significantly copyright 1991 by mit press

trade foreign direct investment and economic growth in asian economies despite the increasing role of foreign direct investment fdi in economic development very limited research has been carried out on the causal links between trade fdi and economic growth in asian economies this study examines empirically the inter play between exports imports fdi and economic growth for nine asian economies by conducting multivariate causality tests in the vector error correction model vecm framework the results reveal two way causal connections between trade inward fdi inward merger and acquisitions m as and growth for most of the sample economies there is a unidirectional causal link running from outward m as to growth and trade these findings suggest that export expansion import liberalization fdi inflows and inward m as are integral elements of the growth process in asian economies

union rents as a source of takeover gains among target shareholders this paper tests the hypothesis that the substantial gains enjoyed by shareholders in target firms during the corporate acquisition boom of the 1980s reflected in part shareholders recouping of the value of rents in the form of wage premiums higher fringe benefits and constraints on managerial authority held by unionized labor analyzing data on the merger and acquisition experience of nearly 300 large publicly traded target firms during the period 1982 86 the author finds consistent with that hypothesis that shareholders average returns from takeover activity were higher in unionized target firms 41 than in nonunion target firms 35 for unionized workers these effects are equivalent to an annualized employee loss approaching 8 of annual earnings or 50 of the wage premium conventionally associated with union coverage

on the causal links between fdi and growth in developing countries we analyse the granger causal relationships between foreign direct investment fdi and gdp in a sample of 31 developing countries covering 31 years using estimators for heterogeneous panel data we find bi directional causality between the fdi to gdp ratio and the level of gdp fdi has a lasting impact on gdp while gdp has no longrun impact on the fdi to gdp ratio in that sense fdi causes growth furthermore in a model for gdp and fdi as a fraction of gross capital formation gcf we also find long run effects from fdi to gdp this finding may be interpreted as evidence in favour of the hypotheses that fdi has an impact on gdp via knowledge transfers and adoption of new technology

foreign direct investment in mexico a cointegration analysis this article addresses the important question of whether foreign direct investment enhances economic growth and labour productivity in mexico both from a theoretical and empirical perspective after briefly reviewing the mexican experience with net fdi inflows during the 1990s the article presents a simple endogenous growth model which explicitly incorporates any positive negative externalities generated by additions to the foreign capital stock using cointegration analysis the article estimates a dynamic labour productivity function for the 1960 95 period that includes the impact of the growth rate in the stocks of both private and foreign capital as opposed to the flows and the economically active population eap rather than the rate of population growth the error correction model ecm estimates suggest that increases in both private ad lagged foreign investment spending as well as the rate of growth in exports have a positive and economically significant effect on the rate of labour pr

microeconomic consequences and macroeconomic causes of foreign direct investment in southern african economies the authors use a new data set on firms in thirteen countries of the southern african development community sadc and comparators from other regions to identify the benefits and determinants of foreign direct investment fdi in this region fdi has facilitated local development in the sadc foreign owned firms perform better than domestic firms are larger and locate in richer and better governed countries and in countries with more competitive financial intermediaries they are also more likely to export than domestic firms and evidence suggests that they might have positive spillover effects on domestic firms based on a standard empirical model the sadc is attracting the inward fdi per capita the region s level of income would predict but this means that there are less capital inflows per capita to the region than there are to wealthier parts of the developing world moreover the sadc is attracting less fdi than comparators for reasons that are possibly more fundamental than current income namely countries past growth record demographic structure and the quality of physical infrastructure interestingly inward fdi is less sensitive to variation in income within the sadc than in other parts of the world but is more responsive to changes in country s openness to trade

openness in the canadian economy 1870 1988 the causal relation between openness and gdp and between exports and imports are examined causality test carried out in growth rates showed that over the period 1870 1988 openness both narrowly and broadly defined granger causes gdp growth tests for the inverse causality produced mixed results validating causality from gdp growth to export plus import growth but rejecting causlaity from gdp growth to export growth it was also found that export growth causes import growth but not the opposite causality tests over four subperiods indicated the importance of openness for only the earliest phase of canadian economic development while the absence of causality in the later subperiods is largely compatible with the experience of the industrial countries no meaningful comparison can be made between the experience of canada and that of developing countries owing to causality variations of openness and to large differences in resource endowments

the tradeoff between wages and employment in trade union objectives this paper demonstrates that contrary to a widely held opinion the determination of the goals of unions is fully amenable to empirical analysis a characterization of the wage and employment setting process in unionized markets is adopted and its qualitative implications examined the first order condition for this model is fitted to time series data on the newspaper industry from ten cities the international typographical union s objective function reveals very restricted opportunities for substituting wages for employment in response to a change in the slope of the employer s labor demand function larger union locals place greater emphasis on wages versus employment than smaller union locals

on the export led growth hypothesis the econometric evidence from china the export led growth hypothesis is tested by estimating an augmented growth equation on the basis of times series data from china the granger no causality procedure developed by toda and yamamoto journal of econometrics 66 1995 was applied to test the causality link between exports and economic growth in a var system three distinct features in this paper stand out compared to earlier studies on china first we have gone beyond the traditional two variable relationship by building a var model in the production function context to avoid a possible specification bias second we follow riezman whiteman and summers empirical economics 21 1996 to test the export led growth hypothesis while controlling for the growth of imports to avoid producing a spurious causality result third we test the sensitivity of causality test results under different lag structures along with the choice of optimal lags in particular the methodology developed by toda and yamamoto 1995 is expected to improve the stan

export composition and growth of selected low income african countries evidence from time series data this paper examines the hypothesis that economic growth is linked to export composition with the use of time series data for some low income african countries on the basis of the regression results the study supports the hypothesis of a positive linkage between the growth of non fuel primary exports and growth however the results cast some doubt on the significance of the positive contribution of the manufactured exports sector to the growth process of the low income african countries

exports and growth is the export led growth hypothesis valid for provincial economies this paper re examines the export led growth hypothesis using provincial data unlike other studies that concentrate on country level data this study investigates the validity of the hypothesis for four largest provinces in korea seoul kyunggee kyungnam and pusan the causal implication of the export led growth hypothesis is generally supported for all provinces in the sample the framework of analysis is two and four variable autoregressive models that include provincial exports provincial output terms of trade and national output shocks granger causal orderings from exports to output growth are generally supported in bivariate causal models in multivariate models variance decompositions and impulse response functions further indicate that export growth has a significant impact on output growth for all provinces although a feedback effect from output to export growth appears in seoul and the kyungnam province

exports investment efficiency and economic growth in ldc an empirical investigation this study seeks to analyse the relationship between exports and growth for 19 less developed countries it utilizes multivariate causality analysis based on the error correction model to address several important hypotheses the results indicate that when exports have a causal influence in the development process that in general this is the result of their effect on both efficiency and accumulation in addition improvements in output and capital accumulation in an economy seem to have just as much of an influence on exports as exports have on output and capital accumulation finally the growth process in east asia seems to be quite different from that in southeast asia

do unions reduce investment evidence from canada the authors test for a link between unionization and net investment rates in canadian manufacturing analysis of data on 18 industries for the years 1967 87 reveals a negative non linear relationship the presence of unions appears to have reduced investment when the percentage of firms in the industry that were unionized was between 0 and approximately 50 with a plateau or slight positive marginal effect above this level in an industry moving from no unions to the mean level of unionization net investment and gross investment are predicted to fall by 66 74 and 18 25 respectively

technical efficiency unions and decentralized labor contracts abstract this paper explores the link between the presence of unions in the workplace the adoption of decentralized labor agreements and technical efficiency using a large sample of italian manufacturing firms we apply the data envelopment analysis and its robust version based on bootstrap theory to get reliable estimates of technical efficiency at the firm level in a standard first stage we devote particular attention to the specific technology adopted by distinguishing 20 different sector frontiers as well as to the presence of outliers the obtained efficiency scores are analyzed in a second stage applying a truncated regression model estimated via maximum likelihood following the simar and wilson 2007 2011 methodology our results highlight that the presence of workplace unionization decreases the level of technical efficiency while aspects limiting the unions power such as a strong exposure to international markets high debt levels or the prevalence of flexible assets partially reduce the negative effect however when firms adopt decentralized labor contracts agreements the effect on efficiency is positive and partially compensates the negative unions effect

organizational structure redistribution and the endogeneity of cost cooperatives investor owned firms and the cost of procurement abstract as an organizational type cooperatives are in general not the dominant form of enterprise nevertheless cooperatives and cooperative like organizations do play important roles in a number of sectors suggesting that in some circumstances they are more efficient than other business forms this paper explores the importance of membership goals on the relative efficiency of the cooperative form of organization the cooperative cost and hence production efficiency advantage is directly linked to the goal alignment between the cooperative and its members and is influenced by the extent of income redistribution between members and the degree of rent seeking that takes place in the organization when there is no aversion to income inequality the members produce at their first best levels however as aversion to inequality rises the production profile of the members converges to the production profile generated when the members face an iof regarding rent seeking if the more less efficient members are able to get their profits valued more total output is increased decreased as a consequence consumers may benefit from the lobbying that occurs inside a cooperative where the powerful members are the most efficient agents

outsourcing and unionization a tale of misallocated resistance resources while many believe the growth in outsourcing contributed to the decline in u s unionization up to the 1990s this argument has never been investigated systematically in this article we analyze the effect of outsourcing on unionization between 1973 and 1993 instrumental variables estimation shows outsourcing contributes to higher quasirents and industry productivity we find the union wage premium increases with the extent of outsourcing both for workers that are substitutable by outsourcing services and workers in jobs that are not substitutes of the tasks being outsourced finally we find no support for the claim that outsourcing reduces unionization jel j5 l2 l6

new evidence on the export led growth nexus a case study of malaysia this paper revisits the highly debated export led growth hypothesis in a number of different ways using malaysia as a case study first the hypothesis is tested in terms of labour and total factor productivity growth as a potential channel via which exports can affect or be affected by gdp growth considering the impact of imports on gdp and productivity growth serves a similar purpose in addition gdp is trade adjusted to avoid the double counting problem arising from the national income identity second the relationships are examined using the relatively recent toda and yamamoto 1995 causality tests these results have major implications and are necessary to reassess the effectiveness of trade policy as a strategy for economic development 2007 the author journal compilation

employment protection and takeovers labor restructuring is a key driver of takeovers and the associated synergy gains worldwide in a difference in differences research design we show that major increases in employment protection reduce takeover activity by 14 27 and the combined firm gains synergies by over half consistent with the labor channel behind these effects deals with greater potential for workforce restructuring show a greater reduction in volume number and synergies the reforms do impede layoffs and the associated wage costs match the magnitude of synergy losses offer prices are not fully adjusted with both bidders and targets exhibiting lower returns following the reforms

foreign direct investment exports and imports in mexico this paper analyses the liberalisation of foreign direct investment fdi in mexico since the late 1980s and its relationships with exports and imports such a process has eased the access of multinational corporations mncs to the country which has promoted exports however it has also resulted in a higher import content and the displacement of local firms which has limited mexico s economic development through the balance of payments constraint the analysis is supported by the existence of linkages bidirectional granger causality between exports imports and fdi

union effects on nonunion wages evidence from panel data on industries and cities the authors test for threat and crowding effects of unions on non union wages at the industry and city levels using panel data on the percent organized and nonunion industry and city wage differentials constructed from current population surveys over the period 1973 89 at the industry level increases in the percent organized were associated with decreases in the nonunion industry wage differential suggesting that crowding effects were the predominant union effect on nonunion industry wage differentials in contrast at the city level increases in the percent organized were associated with increases in the nonunion city wage differential suggesting that threat effects predominated the authors also find evidence of negative cross occupation union effects on nonunion industry wage differentials supporting their hypothesis that the industry level results were partly driven by complementarity between union and nonunion labor

exports and growth critical minimum effort and diminishing returns abstract this paper provides some extensions and qualifications concerning the empirical evidence for the positive impact of exports on growth using a model of feder in particular the ideas of critical minimum effort and diminishing returns with respect to the export sector are given some empirical support

efficient contracts with costly adjustment short run employment determination for airline mechanics this paper presents an empirical analysis of firm specific employment and wage outcomes for mechanics in the domestic airlines industry a dynamic contracting model is presented that incorporates both costly employment adjustment and potential gaps between contract wage rates and the opportunity value of workers time the model gives a useful description of the employment output linkage in the data but is less successful in capturing the dynamic relation between employment contract wage rates and wage rates outside the airline industry copyright 1986 by american economic association

the effects of the nlra on stockholder wealth in the 1930s whereas most recent research examining the effects of the nlra on labor management relations has focused on the impact of specific provisions of the law this study provides an estimate of the impact of the passage of the nlra on 75 firms that were at great risk of being unionized in the 1930s taking changes in shareholder wealth as a measure of the shift in the balance of power caused by the nlra the authors find that the passage of the nlra caused a statistically and economically significant decline in shareholder wealth for the sampled firms specifically by april 1937 stockholder wealth in the firms was 15 9 lower than would have been expected had the nlra not been enacted t he impact of public policy on the balance of power between labor and management has always been a fundamental topic in industrial relations recent changes in many labor management relationships have renewed interest in the influence of public policy on labor relations and raised questions of how modifications in these policies might alter the behavior of the parties according to delaney lewin and sockell 1985 the empirical research on this topic has largely concentrated on specific provisions of the wagner act such as election procedures and regulation of employer unfair labor practices for example getman gold

wage pressure bargaining and price cost margins in uk manufacturing to the extent that union employer bargaining is efficient price cost margins in oligopolistic industries are predicted to depend on wage rents and on the elasticity of substitution between wages and employment in union preferences unanticipated wage inflation will also affect margins cross section and time series analysis of price cost margins in u k manufacturing industries finds that margins tend to be eroded by the level of wage rents and are invariant to the rate of wage inflation copyright 1990 by blackwell publishing ltd

bankruptcy and agency costs their significance to the theory of optimal capital structure we support and generalize our original results 1978 in light of potential impediments to a pure market solution to agency problems and potential causal links between liquidation and bankruptcy in the case of bankruptcy costs market impediments are easily elimi nated through the inclusion of simple provisions in corporate charters and bond inden tures further we demonstrate that recent attempts to link liquidation costs to capital structure are without merit if the firm is to be liquidated on the basis of a rule other than one that maximizes the total value of all the claimants arbitrage profits arise and informal reorganization will discipline management to follow the liquidation rule that is optimal for existing securityholders also we find that the pure market solution is not readily generalizable to other classes of agency problems particularly the risk incentive problem how ever the alternative solution of the risk incentive problem through complex financing contracting may be useful in explaining complexities in contemporary financial contracts in a previous paper 1978 we employed arbitrage arguments to show that in a well functioning market bankruptcy costs are an insignificant determinant of a firm s capital structure we also pointed out that the decision to liquidate and its associated costs can be separated from the event of bankruptcy moreover any costs actually associated with the event of bankruptcy must be limited to the costs associated with an informal reorganization of the capital structure in the capital market prior to default these results were argued to hold under a com plex environment with multiple periods multiple securities and heterogeneous expectations we concluded that bankruptcy costs would be a significant deter minant of capital structure only in the face of irrationality on the part of market participants or unavoidable impediments to the arbitrage process since the publication of our paper there has been an accumulation of the

to be unionized or not to be a case for cost raising strategies under cournot oligopoly abstract this paper analyses the decision by firms under cournot oligopoly as to recognize unions in order to gain market power despite higher costs considering classical models of union firm bargaining namely right to manage rtm and efficient bargaining eb we show that for a sufficiently low level of union power eb firms might adopt cost raising strategies this theoretical prediction is compatible with some empirical evidence in favour of eb and adds to the theoretical finding that eb might dominate rtm under unionized cournot nash oligopoly it also suggests closer antitrust scrutiny as whether unions can provide cartel like services to oligopoly firms allowing them to distort product market competition at the expense of consumers

the role of exports fdi and imports in development evidence from sub saharan african countries the disappointing economic performance of sub saharan african ssa economies in the late 1980s prompted reforms in foreign trade and foreign direct investment fdi in the early 1990s using the autoregressive distributed lag ardl approach and pedroni panel estimation procedures that allow for heterogeneity this study found that exports and fdi have a significant impact on economic growth granger type causality tests show the interrelatedness of exports fdi imports and income variables the results also provide evidence of a two stage causal chain of exports imports and income this article calls for more market oriented policy reforms in ssa countries

causal relationship between energy consumption and gdp revisited the case of korea 1970 1999 abstract causal relationship between energy consumption and economic growth is investigated applying a multivariate model of capital labor energy and gdp usual btu energy aggregate is substituted with a divisia aggregate in an attempt to mitigate aggregation bias to test for granger causality in the presence of cointegration among the variables we employ a vector error correction model rather than a vector autoregressive model empirical results for korea over the period 1970 1999 suggest a long run bidirectional causal relationship between energy and gdp and short run unidirectional causality running from energy to gdp the source of causation in the long run is found to be the error correction terms in both directions

sunk investment bargaining and choice of capital structure this paper shows how a firm might optimally choose debt to affect the outcome of bilateral bargaining with workers or other input suppliers it is shown that debt may alleviate the well known underinvestment problem associated with the inability to write precommitment contracts also in such circumstances debt could be pareto improving over complete equity financing the relationship between the optimal level of debt and asset specificity of investment and bargaining power of the firm vis a vis the workers is explored the williamson conjecture that higher asset specificity will lead to less debt is shown not to be valid in general

understanding the wage patterns of canadian less skilled workers the role of implicit contracts understanding the wage patterns of canadian less skilled workers we examine the wage patterns of canadian less skilled male workers over the last quarter century by organizing workers into job entry cohorts we find entry wages for successive cohorts declined until 1997 and then began to recover wage profiles steepened for cohorts entering after 1997 but not for cohorts entering in the 1980s a period when startwageswere relatively high we argue that these patterns are consistent with a model of implicit contracts with recontracting inwhich aworker s currentwage is determined by the best labour market conditions experienced during the current job spell comprendre les patterns de salaires des travailleurs canadiens moins qualifi es le r ole des contrats implicites on examine les patterns de salaires des travailleurs masculins moins qualifi es au cours du dernier quart de si ecle en d epartageant les travailleurs en cohortes diff erentes selon le moment d entr ee dans le monde du travail on d ecouvre que les salaires a l entr ee des cohortes successives ont d eclin e jusqu en 1997 et qu ensuite ils ont commenc e a cro itre les profils de salaires se sont raffermis pour les cohortes entrant dans le monde du travail apr es 1997 mais pas pour les cohortes qui sont entr ees dans le monde du travail dans les ann ees 1980 une p eriode o u les salaires de d epart etaient relativement elev es on sugg ere que ces patterns sont consistants avec un mod ele de contrats implicites de ren egociation qui implique que le salaire courant des travailleurs est d etermin e par les meilleures conditions du march e du travail dont on a fait l exp erience dans la p eriode r ecente de travail

the effect of unionization on productivity evidence from a long panel of coal mines the author measures the effect of unionization on productivity based on a panel of west virginia coal mines from 1897 to 1928 output and inputs are measured in physical terms and most of the mine

mexico and export led growth the porfirian period revisited this paper examines mexico s development experience during the golden age of export led growth in latin america propelled by liberal reforms under the porfirio diaz regime 1877 1910 mexico s exports expanded at unprecedented rates and this is widely believed to have brought about rapid growth and far reaching structural changes to the domestic economy this paper questions this view using a new and more comprehensive data set it argues that buoyant export performance had relatively little impact on key macroeconomic and sectoral indicators the pre 1911 mexican experience is thus shown to be quite distinct from that of other large primary producing countries such as argentina and canada where rapid economic growth was largely export led a distinctive feature of the mexican economy during the 1877 1911 period was the rapid

immigrants and the dynamics of high wage jobs the authors exploit immigrant identifiers in the canadian labour force survey lfs and the longitudinal dimension of these data to compare the labor force and job dynamics of immigrants and native born workers they examine the role of job as opposed to worker heterogeneity in driving immigrant wage disparities and investigate how the paths into and out of jobs of varying quality compare between immigrant and native born workers they find that the disparity in immigrant job quality which does not appear to diminish with years since arrival reflects a combination of relatively low transitions into high wage jobs and high transitions out of these jobs the former result appears to be due equally to difficulties obtaining high wage jobs directly out of unemployment and to using low wage jobs as stepping stones the authors find little or no evidence however that immigrant job seekers face barriers to low wage jobs

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

unions and the economy what we know what we should know the wages and working conditions of about one in three canadian workers are determined by collective bargaining in this paper current knowledge about the economic effects of collective bargaining is surveyed unions raise wages by about 15 percent on average and reduce wage dispersion for their members while also reducing profits unions do not seem to reduce employment levels in affected firms or cause nonunion wages to fall efficiency losses due to sectoral misallocation of labor and to strikes are small but some evidence suggests lowered investment in unionized firms union effects on total factor productivity need more careful study using firm level data

profitability and compensation adjustments in the retail food industry this paper uses longitudinal data provided by a large unionized grocery store chain to examine the relationship between profitability and compensation adjustments between 1976 and 1985 consistent with the predictions of a nash bargaining model negotiated compensation adjustments were inversely related to the pre negotiation operating income of the relevant stores concessionary compensation adjustments in response to relatively low levels of prior profitability occurred in the first year of contracts and subsequent compensation growth was unaffected by differences in prior profitability decreases in compensation rates led to significant improvements in subsequent economic performance estimates of this relationship however indicate that the impact of compensation adjustments on profitability changes was less than dollar for dollar

union effects in low wage services evidence from canadian childcare empirical evidence presented in this paper based on survey data for canadian childcare workers in 1991 contradicts most stereotypes of the childcare labor market although childcare labor was low wage the authors find that the union impact on wages 15 and fringe benefits was in line with union effects found in other better compensated work and they find substantial returns to education occupational level and firm specific experience the returns to the skill related attributes were blunted somewhat in the union sector except where such returns stood to benefit the median union voter the findings suggest that monetary incentives can be used to encourage improvements in the education experience and skill acquisition of childcare workers unions can improve wages and benefits for childcare workers just as they can for most other workers suggesting the viability of union organizing in this sector despite the traditional barriers to organizing low wage service sector workers in small firms u nion organizing in the growing lowwage female dominated service sector is often regarded as key to offsetting the decline in union membership that is occurring in the areas of traditional union strength the recent success of the service

an empirical investigation of the causal relationship between openness and economic growth in china this study investigates the causal relationship between openness and economic growth in china the integration and cointegration properties of the data are analysed and the models of granger sims geweke and hsiao are used to identify a bi directional causal relationship between gnp and exports plus imports this bi directional causation is consistent with china s development strategy of protected export promotion

do union wealth concessions explain takeover premiums the evidence on contract wages abstract this paper investigates whether union wealth concessions caused by changes in real wage growth following takeovers explain target firm share price premiums point estimates imply that union wealth changes in the six years following the acquisition account for 1 to 2 of shareholder premiums this figure rises to 5 over 18 years for hostile takeovers union wealth increases by roughly 3 and 10 of shareholder gains over 6 and 18 year periods the 95 confidence interval for wage changes implies that unions may lose up to a quarter or gain up to a fifth of what target shareholders gain

causality between exports and economic growth abstract this paper utilizes granger causality tests in investigating the relationship between exports and national income from a consistent data set for 47 developing countries in africa new empirical results as well as suggestions for future research are presented

union firm bargaining and the influence of product market power and production technology on systematic risk the relationship between the capm firm beta and the firm s microeconomic decisions is studied by a model under uncertainty which combines the feature of an ex ante inputs substituable production technology and the existence of a union which bargains over various economic dimensions of the firm it is shown that the earlier findings of a relationship between the firm beta the firm product market power and the labor capital ratio may be reinforced through the indirect channel of labor market bargaining but the relationship becomes more complex and heavily depends on the scope of the union firm bargaining process this yields the empirical prediction confirmed for a panel of belgian firms that any proper estimation of the determinants of firm beta must control for firms in the sample being unionized

union rent seeking intangible capital and market value of the firm abstract this study considers the effect of unions on intangi ble capital investment and profitability within the context of a market value rather than a more traditional accounting based approach theory is provided suggesting unions are able to affect profitability by sharing in the economic returns to firm specific intangible capital in support of this hypothesis we find unionization reduces the returns to r d and produces a corresponding limiting influence on r d investment at the firm level i introduction a n extensive literature in economics has ex amined the determinants of profitability with much of the focus centering on the role of market structure only recently however have the effects of labor unions on profitability been analyzed ths is surprising since labor economists long have emphasized union influences on wages and productivity that in turn may affect profitabil ity in recent studies freeman 1983 and karier 1985 report a significant limiting influence of unions on price cost margins in high concentra tion manufacturing industries using firm level data and the market based tobin s

understanding the wage patterns of canadian less skilled workers the role of implicit contracts we examine the wage patterns of canadian less skilled male workers over the last quarter century by organizing workers into job entry cohorts we find entry wages for successive cohorts declined until 1997 and then began to recover wage profiles steepened for cohorts entering after 1997 but not for cohorts entering in the 1980s a period when start wages were relatively high we argue that these patterns are consistent with a model of implicit contracts with recontracting in which a worker s current wage is determined by the best labour market conditions experienced during the current job spell on examine les patterns de salaires des travailleurs masculins moins qualifies au cours du dernier quart de siecle en departageant les travailleurs en cohortes differentes selon le moment d entree dans le monde du travail on decouvre que les salaires a l entree des cohortes successives ont decline jusqu en 1997 et qu ensuite ils ont commencea croitre les profils de salaires se sont raffermis pour les cohortes entrant dans le monde du travail apres 1997 mais pas pour les cohortes qui sont entrees dans le monde du travail dans les annees 1980 une periode ou les salaires de depart etaient relativement eleves on suggere que ces patterns sont consistants avec un modele de contrats implicites de renegociation qui implique que le salaire courant des travailleurs est determine par les meilleures conditions du marche du travail dont on a fait l experience dans la periode recente de travail

the effect of labor unions on ceo compensation we find evidence that labor unions affect chief executive officer ceo compensation first we find that firms with strong unions pay their ceos less the negative effect is robust to various tests for endogeneity including cross sectional variations and a regression discontinuity design second we find that ceo compensation is curbed before union contract negotiations especially when the compensation is discretionary and the unions have a strong bargaining position third we report that curbing ceo compensation mitigates the chance of a labor strike thus providing a rationale for firms to pay ceos less when facing strong unions

good jobs bad jobs and redistribution we analyse the question of optimal taxation in a dual economy when the policy maker is concerned about the distribution of labour income income inequality is caused by the presence of sunk capital investments which creates a good jobs sector due to the capture of quasi rents by trade unions with strong unions and high planner preference for income equality the optimal policy is a combination of investment subsidies and progressive income taxation if unions are weaker the policy maker may instead choose to tax investment

the role of foreign direct investment in china s post 1978 economic development abstract the evolution of china s policy toward foreign direct investment fdi during the post 1978 period is reviewed and the volume sources geographic distribution and composition of fdi are analyzed it is found that fdi has been positively associated with economic growth and the increase of total fixed asset investment in china foreign direct investment has also forced an increasing number of domestic manufacturers to compete globally it has also been associated with phenomena such as a the accelerating uneven development between the coastal and inland provinces b worsening income distribution and c declining ideological commitment while the opening of the chinese economy to fdi is still an ongoing process positive stimulating effects of foreign direct investment in china are observed and these are found to contribute toward the success of its recent economic reforms

causality between export growth and industrial development empirial evidence from the nics abstract this paper investigates the causal relationship between export growth and industrial development in eight newly industrializing countries nics results of sims causality test show that for most of the nics there is a strong bidirectional causality between the growth of exports and industrial development these findings support the export led growth strategy in that expansion in exports not only promote the growth of national income but also lead to structural transformation of the developing countries

the role of economic theory in modelling the long run this argues for a closer link between the modelling of the long run relations in applied economics and the intertemporal equilibrium notion from economic theory this abstract was borrowed from another version of this item

foreign direct investment exports and domestic performance in mexico a causality analysis abstract most empirical work on the effects of outward oriented policies in developing countries has identified openness with trade however openness involves much more than just trade this paper analyses the relationship among trade foreign direct investment and domestic income in mexico during the period 1980 i to 1999 iv on the basis of the granger non causality procedure recently developed by toda and yamamoto journal of econometrics 66 1995 225 and dolado and lutkepohl econometric review 15 1996 369 the results support the effectiveness of the outward looking orientation policy in this country

equity risk and the labor stock the case of union contracts this paper investigates the role of the stock of unionized labor in determining equity investment risk i estimate a labor stock measure based on expected compensation costs and use the ratio of labor stock to total assets as a risk proxy at the median the labor stock is comparable in magnitude to total assets regression estimates show the associations between labor based risk proxies and equity market risk measures are both economically and statistically significant in addition the labor based measures provide risk information over and above information contained in standard risk proxies such as financial and operating leverage

unionization and profitability evidence from the capital market this paper examines the effect of unionization on the profitability of firms abnormal monthly common stock returns for a sample of 253 nyse listed firms are estimated for the month in which the union petitions for an election and for the month in which the national labor relations board certifies the election outcome the results suggest that unionization on average is associated with a reduction in equity value when unions win an election the average loss associated with the unionization drive is 3 8 percent of equity value when unions lose an election there is an average net reduction of 1 3 percent in the equity value of the firm

exports growth and causality in ldcs abstract using akaike s optimal lag criterion in a granger causality test the causal relationship between export growth and economic growth and vice versa is re examined for 20 countries it is argued that earlier analyses which ignore optimal lags in granger or sims causality tests suffer from certain shortcomings which are overcome by the present approach the results suggest some support for the export promotion hypothesis especially in the case of well known nics and thus differ from previous applications of granger test which did not adopt an optimum lag criterion and which showed no causality from export growth to economic growth in such cases however they are inconclusive in evaluating competing hypotheses

exports export composition and growth cointegration and causality evidence for malaysia this paper comprehensively tests the export led growth elg hypothesis for malaysia for the period 1955 90 using cointegration and causality testing based on hsiao s synthesis of the granger test and akaike s minimum final prediction error criterion the results provide support for the elg hypothesis aggregate exports granger cause real gdp and non export gdp this relationship is found to be driven by manufactured exports rather than by traditional exports

unionization and plant closure in canada this paper examines for the first time the role of unionization as a determinant of plant closings in canada using the 1999 to 2001 canadian workplace and employee survey the paper contributes to the north american evidence by showing that the share of a plant s workers covered by collective bargaining has a robust positive partial correlation with the probability of larger plants closing for smaller plants the extent of unionization tends to be much lower and its variation plays no role in plant closure the study highlights the theoretical and statistical importance of examining closure separately for large and small plants ce memoire examine pour la premiere fois le role de la syndicalisation en tant que determinant de la fermeture d usines au canada a l aide des resultats de l enquete sur le milieu de travail et les employes de 1999 et de 2001 emte le texte contribue a enrichir le dossier qui montre qu il y a correlation positive partielle robuste entre la portion des travailleurs d usines couverts par une convention collective et la probabilite de fermeture des grandes usines pour les plus petites usines le degre de syndicalisation tend aetre plus faible et sa variation ne joue pas de role dans le processus de fermeture d usines cette etude montre l importance theorique et pratique qu il y a aetudier separement les fermetures des grandes et des petites usines

exports growth and causality in developing countries abstract previous empirical studies have interpreted results in regressions of output variables on export variables as providing support for an export promotion development strategy such an interpretation is questionable since these regressions provide no means of determining the direction of causality this paper performs causality tests between exports and growth for 37 developing countries the results cast considerable doubt on the validity of the export promotion hypothesis

capital labor and the firm a study of german codetermination under the german corporate governance system of codetermination employees are legally allocated control rights over corporate assets through seats on the supervisory board that is the board of nonexecutive directors the supervisory board oversees the management board the board of executive directors approves or rejects its decisions and appoints its members and sets their salaries we empirically investigate the implications of this sort of labor participation in corporate decision making we find that companies with equal representation of employees and shareholders on the supervisory board trade at a 31 stock market discount as compared with companies where employee representatives fill only one third of the supervisory board seats we show that under equal representation management board compensation provides incentives that are not conducive to furthering shareholders interests possibly because labor maximizes a different objective function than shareholders we document that under equal representation companies have longer payrolls than their one third representation peers have finally we provide evidence that shareholders respond to the allocation of control rights to labor by linking supervisory board compensation to firm performance and by leveraging up the firm jel g32 g34

right to work laws new evidence from the stock market 1 introduction business organizations the national right to work committee and organized labor periodically devote enormous resources to battles over passage or repeal of individual state rightto work rtw laws all rtw laws outlaw union shop agreements clauses in collective bargaining agreements that require employees to join the union that represents them and about half also outlaw agency shop agreements clauses in collective bargaining agreements that require nonmembers to pay a fee to the union to cover the cost of representation supporters of rtw argue that employees should not be required to pay dues to a labor organization that they do not support opponents argue that because union contracts and grievance arbitration systems cover all employees members and nonmembers rtw laws encourage free riding by individuals who want to gain the benefits of unionization without bearing the costs and that this weakens labor unions are rtw laws largely symbolic or do they reduce union membership the probability of union growth and union bargaining power informed opinion is still sharply divided one view is that rtw laws reduce the probability of union organizing at least in the years immediately following their passage and that this along with lower levels of membership in previously organized units reduces the level of unionization in a state e g hirsch 1980 carroll 1983 garofalo and malhotra 1992 davis and huston 1993 1995 ellwood and fine 1987 present evidence that the effect on new organizing is most severe with new organizing diminished between 32 and 38 in the 10 years after passage of a rtw law 1 zax and ichniowski 1991 see also ichniowski and zax 1991 demonstrate that the dampening of new organizing extends to the public sector when it operates under rtw laws even when those laws are favorable to unions in other respects others however argue that rtw legislation is largely symbolic it reflects the prevailing anti union opinion climate of a particular state but has little independent impact on union organizing or membership moore and newman 1985 1975 wessels 1981 lumsden and peterson 1975 sobel 1995 presents evidence on the true number of free riders consistent with the taste hypothesis rtw legislation is passed in this perspective in states in which public opinion is anti union and the labor movement is politically weak in these states workers are less attracted to unions and it is this public opinion climate rather than the law itself that hurts union growth 2 we present a new type of evidence on this issue from two states in which public opinion had turned sharply against unions or at least in favor of rtw in the period before the passage of a rtw law we reason that if passage of the rtw law itself actually lowers the probability of unionization or reduces the bargaining power of unions operating within a particular state beyond the effect of the prior shift in attitudes then anticipated future profits of firms operating in that state will rise in response to passage of that law because unions are associated with lower firm profits 3 hence equity values of those firms will increase we use event study methodology to discover whether or not this actually happened in louisiana when it passed a rtw law in 1976 and in idaho when it passed a rtw law in 1985 1986 4 louisiana and idaho are both well suited to research based on the event study technique legislative action in both states took place in the period in which daily stock price data are available from all three sources of stock price data new york american and nasdaq 5 daily as opposed to monthly stock price data are much more likely to reveal statistically significant changes in shareholder equity brown and warner 1985 because we use daily rather than monthly data a finding of no statistically significant change in shareholder equity would be valid evidence that rtw laws are symbolic rather than substantive

the economic effect of strikes on the shareholders of nonstruck competitors prior research has established that strikes incur significant economic losses for the struck firms this event study of intraindustry strike effects in highly concentrated industries focuses on two samples firms that experienced a strike involving 1 000 or more workers between 1982 and 1990 and the nonstruck firms that were their closest competitors contrary to the prediction of some models that the economic losses incurred by struck firms are captured by their nonstruck competitors the results indicate that the total spillover from shareholders of the struck firms to shareholders of the nonstruck competitors in this sample was not statistically significant the authors speculate that the struck firms were able to limit spillover effects through such tactics as stockpiling inventory before a strike also concessions by labor which were common outcomes of collective bargaining during the sample period probably significantly reduced the struck firms total strike cost

trade unions nonneutrality and stagflation the claim that in policy games nonneutrality and a stagflation bias emerge in equilibrium if the unions care about inflation per se is discussed this assumption is shown to be not necessary to obtain a stagflation bias the same applies to nonneutrality if a government acts in the economy the question of whether unions should be envisaged as institutions i e interested in variables unrelated to wages and employment is also addressed two model based alternatives providing microeconomic foundations versus macroeconomic foundations to unions behaviour are presented the conclusion is that the modelling of unions remains an unsettled problem

productive efficiency and growth policies for the caribbean productive economic efficiency and factors affecting it was evaluated in the caribbean between 1983 to 1992 results from non parametric programming indicated that efficiency i e pure technical allocative and economic measures were lower and more variable in caribbean than in other western hemisphere countries i e north america and latin america tobit regression analysis indicated higher levels of private and foreign investments productive infrastructure credit availability education level and consumption of domestically produced goods had positive impacts on the efficiency measures on the other hand higher levels of public expenditure income tax and export taxes and higher inflation rates had negative effects these results support the current trend towards advocating more open economies i e letting the free market work and encouraging governments to confine their functions to facilitative regulatory type roles and to undertaking tasks that are not generally undertaken by the privat

an empirical test of an asymmetric information model of strikes recent developments in the theory of strategic bargaining demonstrate how informational asymmetries can lead to prolonged and costly bargaining these models can be applied to contract negotiations yielding an economic theory of strikes to date however few empirical tests of these models have been carried out in this paper a set of predictions concerning the incidence and unconditional duration of strikes is derived from a simple bargaining model in which the union is uncertain about the firm s future profitability these predictions are then tested on a micro data set of major u s contract negotiations that took place from 1973 to 1977

constructing confidence intervals using the bootstrap an application to a multi product cost function a multi product cost function system is estimated for 387 banks in states that allow branch banking the bootstrap resampling method is used to construct confidence intervals for marginal costs output cost elasticities economies of scale and scope and allen elasticities of substitution confidence intervals for these measures are usually constructed using a first order variance approximation under a normality assumption but such confidence intervals are inexact if the measures are not normally distributed or the variance approximations are imprecise we find that the bootstrap standard error estimates can differ significantly from the usual estimates furthermore we use the bootstrap to expand the analysis of cost function regularity properties copyright 1990 by mit press

labor protection and leverage this paper exploits inter temporal variations in employment protection across countries and finds that rigidities in labor markets are an important determinant of firms capital structure decisions over the 1985 2007 period we find that reforms increasing employment protection are associated with a 187 basis point reduction in leverage we interpret this finding to suggest that employment protection increases operating leverage crowding out financial leverage this result is robust across measures of employment protection and leverage and does not appear to be due to pre treatment differences between treated and control firms omitted variables unobserved changes in regional economic conditions and reverse causality heterogeneous treatment effects are consistent with our economic intuition we find that the negative effect is more pronounced in firms that are subject to frequent hiring and firing

do highly unionized companies compensate their ceos less in periods of financial distress evidence from canada in this article the author studies the strategic interaction between employee stakeholders in particular labor unions and top management and he evaluates the effect of the two parties inherent competitive rent seeking behavior on ceo pay using a panel of firms listed on the s p tsx composite index the author shows that ceo compensation withstood the financial crisis 2008 2011 despite lower and even negative corporate performance further highly unionized companies were associated with higher ceo pay in terms of non equity elements such as salary and pension allocations the presence of unions had no observed effect in reducing bonuses stock options and restricted stock units these findings have implications for the debate on income inequality and the power of unions to bring about change

wage employment determination and a union tax on capital can theory and evidence be reconciled if unions appropriate quasi rents from relation specific capital observed factor prices no longer reflect effective costs unionism has effects akin to a partial factor tax on capital demand curve settlements need not imply higher k l among union firms

unionization incomplete contracting and capital investment this article examines empirically the hypothesis that incomplete contracts and resulting opportunistic behavior over the return to sunk assets reduces investment union firm contracts are incomplete because they 1 do not prevent all actions aimed at changing the existing contract 2 cover a relatively short time period and 3 do not extend to union members yet to be hired the primary response of firms is to reduce investment in specific durable assets and also to reduce employment growth and increase debt the authors find fairly strong evidence of these effects in a sample of large publicly traded firms using firm specific measures of unionization copyright 1993 by university of chicago press

on the contract curve a test of alternative models of collective bargaining the traditional model of collective bargaining confines unions to settlements constrained by the employer s labor demand curve but an alternative model places wage employment outcomes on a contract curve that extends beyond the labor demand curve this paper derives a multidimensional hedonic contract curve model in which employment security provisions are used to maintain efficient bargains outside the employer s demand curve and distinguishes empirically between the contract curve and demand constraint models using data for public school teachers in new york state estimates clearly support the contract curve model over the demand constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment security provisions

dept and input misallocation of agricultural supply and marketing cooperatives kim and maksimovic provide an empirical model to examine the effect of dept on a firm their model is adopted to examine agricultural supply and marketing cooperatives using a short run variable cost function we find firm efficiency decreases as dept increases a us 1 increase in indebtedness increases total short run variable costs by us 0 0167 or roughly 1 67 dept tends to shift input usage away from labour inputs a test developed by conrad and unger is applied to determine whether the agricultural supply and marketing cooperatives are at a long run equilibrium capacity it is found that most of the cooperatives were overinvested in capacity however dept does not explain this overinvestment finally the effect of dept on total productivity over the study period is examined it is found that dept has had a small positive impact on total factor productivity growth scale economics and non optimal capacity had large impacts on total factor productivity although dept is associated with short run misal

the incidence of regulatory rents in the motor carrier industry this article focuses on two questions in the debate over motor carrier regulation first did regulation create eliminate or have no effect on monopoly rents in the trucking industry second ifthere were rents what was their incidence were they received by owners oftrucking firms dissipated through higher costs or captured by the teamsters union data on share price responses to deregulation announcements reveal declines in expected profits of 8 19 of totalfirm value this suggests that regulation created monopoly profits and indicates that at least some of these rents accrued to owners of trucking firms firms responses to regulatory change are modelled as functions of company s operating characteristics and measures of unionization operating efficiency and service characteristics are shown to affect the impact of deregulation on share values

the effect of wage bargains on the stock market value of the firm the author estimates the change in the value of common stock resulting from an unexpected change in collectively bargained labor costs using bargaining unit wage data and nyse stock returns he estimates a dollar for dollar trade off between these variables this result is consistent with stock valuations based on present value maximizing managerial decisions that is the results are consistent with hotelling s lemma the author also finds support for the hypothesis that collective bargains maximize the sum of shareholder and union member wealth that is the results are consistent with strong efficiency in the contracting environment copyright 1989 by american economic association

multiproduct cost relationships for retail fertilizer plants volume cost relationships developed from the statistical analysis of accounting data have long provided useful information for evaluating firm efficiency french previous descriptive and statistical analyses of accounting data as well as economic engineering cost studies of retail fertilizer firms have focused on a single product line anderson and miller raikes and heubrock williams foster and simpson service o rourke or have simply summarized industry accounting data akridge and downey problems associated with using accounting data to estimate statistical cost functions include a the failure to handle satisfactorily multiproduct firm cost relationships

unemployment in regional labor markets using structural theories to understand local jobless rates in west virginia the author uses a range of structural labor market models to understand differing regional jobless rates in a state affected by pockets of structural unemployment four theories of regional structural unemployment are presented and their hypotheses are statistically evaluated using west virginia county panel data the author then presents case study evidence to compare these statistical results with the realities of the county labor markets both types of empirical evidence suggest that a segmented non market clearing model in which structural unemployment stems from queuing for above market clearing wages in both a high wage primary sector and a lower wage secondary sector can shed the most light on regional unemployment rates in west virginia