in the shadow of the vote decision making in the european community scholarship on the european community ec focuses particular attention on how formal voting rules and institutional reform condition decision making outcomes the predominant view of ec history holds that decision making remained paralyzed until institutional reforms in 1987 and 1992 restored and expanded adherence to majority voting rules which in turn unblocked and expedited ec legislative efforts in this study i challenge these fundamental assumptions using comprehensive data for 1974 95 and a series of quantitative assessments including event history analysis i show that decision making in the 1970s was anything but paralyzed that the impact of the luxembourg compromise has been greatly overstated that institutional reforms actually encumbered rather than eased the ec legislative process and that institutional effects are mediated by the underlying distribution of member state preferences the findings have important implications for our understanding of the history and future trajectory of european integration and highlight the applicability of standard political science theories and methods to the study of the ec

strike coordination and dismissal in uniform wage settings abstract we study a gift exchange game with 12 employees and one employer when the employer can offer individually differentiated wages in a setting without collective action we observe high levels of wages effort choices and total earnings when the employer is restricted to offering a uniform wage trust and reciprocity drop dramatically due to widespread shirking the stepwise introduction of two collective action mechanisms strike and coordination increases the employees share of the total earnings but does not mitigate the free riding problem adding employment risk to the collective action setup drives up wages reduces free riding and leads to higher total earnings however this increase in productivity is not sufficient to achieve the high levels of wages efforts and earnings that we observe with individually differentiated wages

statistical inference for aggregates of farrell type efficiencies in this study we merge results of two recent directions in efficiency analysis research aggregation and bootstrap applied as an example to one of the most popular point estimators of individual efficiency the data envelopment analysis dea estimator a natural context of the methodology developed here is a study of efficiency of a particular economic system e g an industry as a whole or a comparison of efficiencies of distinct groups within such a system e g regulated vs non regulated firms or private vs public firms our methodology is justified by the neoclassical economic theory and is supported by carefully adapted statistical methods copyright 2007 john wiley sons ltd

central limit theorems for aggregate efficiency applied researchers in the field of efficiency and productivity analysis often need to estimate and make inference about aggregate efficiency such as industry efficiency or aggregate efficiency of a group of distinct firms within an industry e g public versus private firms regulated versus unregulated firms etc while there are approaches to obtain point estimates for such important measures no asymptotic theory has been derived for it this is the gap in the literature we fill with this paper specifically we develop full asymptotic theory for aggregate efficiency measures when the individual true efficiency scores being aggregated are observed as well as when they are unobserved and estimated via the data envelopment analysis or the free disposal hull as a result the developed theory opens a path for more accurate and theoretically better grounded statistical inference e g estimation of confidence intervals and conducting statistical tests on aggregate efficiency estimates such as indust

effects of labor legislation and industry characteristics on union coverage in canada the authors investigate the determinants of union coverage using 1986 cross section data on canadian workers larger firm size larger establishment size and higher injury rates increase the probability of union coverage industry concentration import penetration and the substitutability of labor do not affect coverage through their impact on the union nonunion wage differential but concentration increases the probability of coverage through a mechanism unrelated to the wage differential mandatory checkoff provisions increase the probability of coverage but the estimated effect is barely significant restrictions on replacement workers and interprovincial differences in automatic certification provisions have statistically insignificant effects finally the results are sensitive to treating some industry characteristics as endogenous that is jointly determined with union coverage and union and nonunion wages a treatment not used in other studies

firm size efficiency and employment revisited a review article whether small business can help countries compete as many american commentators believe or whether increasing firm size is required for success in global markets as much european policy assumes is still a question under intense debate while the terms of the debate have been persuasively challenged by howard 1990 who argues that the real issue isn t size it s industrial organization p 88 the popular american view of small business has been most comprehensively challenged by brown hamilton and medoff 1990 however we find that both their analysis and evidence are flawed in a number of important respects to be developed next and then we shall go back to the broader issues raised by howard 1990 best 1990 loveman and sengenberger 1991 and earlier by fitzroy 1989 and 1990 brown hamilton and medoff henceforth bhm start by disputing the growing importance of small firm employment found by many writers they find stable or declining small business employment shares in the u s however sengenberger loveman and piore 1990 find growing small business shares in many countries in recent years including a rise of 7 5 in manufacturing employment by u s firms with less than 100 employees from 1980 86 compared to a decline of 10 8 in firms with over 500 workers howard p 90 bhm devote much space to the evidence that large employers seem to pay substantially higher wages and fringe benefits even after controlling for the higher levels of education training and

the politics of speculative attacks in industrial democracies recent models of speculative currency crises contend that market expectations of policy behavior can trigger a speculative attack we argue that political processes and partisan objectives inform expectations about the government s commitment to the exchange rate first market actors anticipate periods when the partisan identity of a government may change through an election or a cabinet collapse second party labels provide information to currency traders about the policy objectives of a potential government consequently we contend that the probability of a speculative attack will be higher when markets expect the cabinet to end and when the cabinet dissolution is likely to produce a leftward shift in policy a discrete timesurvival model is used to estimate the probability that a cabinet will dissolve in any given month for sixteen parliamentary democracies from 1970 to 1995 the predicted values are then used as a proxy for market expectations in a model of speculative currency crises

foreign bank diversification and efficiency prior to and during the financial crisis does one business model fit all diversified and focused business models may affect foreign bank efficiency differently we investigate whether there is an optimal business model along three business dimensions assets funding and income and which business model is optimal for foreign banks in a financial center we apply recently developed non parametric methods with bootstrap to estimate group efficiency to test for differences across groups and finally to analyze the link between bank efficiency and diversification measures using luxembourg bank data that include the financial crisis we find that there is no unique business model the most efficient business model appears to be a focused asset funding and income strategy banks organizational forms play a role branches may be preferable to subsidiaries prior to the financial crisis whereas bank subsidiaries perform better than branches during the financial crisis however branches diversified in assets funding and income exploit efficiency advantages during the financial crisis

aggregation of economic growth rates and of its sources abstract in this paper we consider the question of measuring aggregate economic growth and its sources we derive a theoretically justified solution for aggregating across firms industries countries etc growth rates and their sources within the framework of solow s 1957 growth accounting method the resulting aggregation scheme turns out to be quite intuitive and in fact the one that is sometimes used in practice but with theoretical justification missing and so the main value of our work is that our formal derivations show under what conditions this scheme has economic theory justification we also provide a small empirical illustration of our method on the real data set and show how different the conclusions can be depending on the aggregation scheme used

wage and employment determination in a unionized industry the iwa and the british columbia wood products industry two non nested models of union wage and employment determination are estimated using data on the international woodworkers of america iwa and the british columbia wood products industry one model predicts wage and employment outcomes on the labordemand function while the other predicts efficient outcomes on the contract curve the models provide empirical estimates of the union s preferences the production technology and the comparative statics of the models an attempt is made to choose the true model for this industry unfortunately non nested hypothesis tests and other criteria for model discrimination cannot reject one model in favor of the other

transfers of governmental power the meaning of time dependence king alt burns and laver 1990 proposed and estimated a unified model in which cabinet durations depended on seven explanatory variables reflecting features of the cabinets and the bargaining environments in which they formed along with a stochastic component in which the risk of a cabinet falling was treated as a constant across its tenure two recent research reports take issue with one aspect of this model warwick and easton replicate the earlier findings for explanatory variables but claim that the stochastic risk should be seen as rising and at a rate which varies across the life of a cabinet bienen and van de walle using data on the duration of leaders allege that random risk is falling we continue in our goal of unifying this literature by providing further estimates with both cabinet and leader duration data that confirm the original explanatory variables effects showing that leaders durations are affected by many of the same factors that affect the durability of the cabinets they l

unions wages and productivity some evidence from uk engineering firms estimates of union wage and productivity effects are derived using primary micro level panel data for a sample of firms in the uk engineering industry union wage differentials of the order of 10 are suggested from the results whereas union productivity impacts appear to be non linear with respect to union density

government employment and the provision of fringe benefits this study uses individual level data from the united states to examine the influence of government employment on the provision of five major fringe benefits four of the five benefits are more likely to be provided to government workers than to their private sector counterparts unlike wage comparisons which typically find substantial overpayment only for federal workers the findings suggest that past wage differentials underestimate the true compensation advantage enjoyed by government workers

the union impact on profits evidence from industry price cost margin data this paper uses industry price cost margin data to estimate the extent to which unions reduce profits estimates allowing for the endogeneity of union status are contrasted with estimates that assume union status is exogenous and not determined in part by either profitability or industry structure endogeneity is found to be an important consideration in estimating the union impact on profits two stage estimates are considerably larger than ols estimates the final section explores the total estimated redistribution from capital to labor in the manufacturing sector an important conclusion is that unions raise prices less than was previously believed

industry performance and structural efficiency measures solutions to problems in firm models abstract it is shown that average unit structural efficiency measures do not measure the level of technical efficiency in a firm model of an industry alternative structural efficiency measures generalized to multiple input and multiple output technologies are presented as a solution to the problem of how to estimate the relative performance of an industry as a whole where reallocation of inputs across firms is not feasible compared to existing measures the proposed measures require additional information therefore the linear programming dea models needed to obtain this information are presented this non parametric approach to relative efficiency measurement is also used to obtain economic efficiency estimates for an industry as a whole without imposing a priori restrictions on the relative input and output weights

the rise and fall of unions in the united states abstract union membership in the united states displayed a shaped pattern over the 20th century while income inequality sketched a a model of unions is developed to analyze these facts there is a distribution of productivity across firms in the economy firms hire capital plus skilled and unskilled labor unionization is a costly process a union chooses how many firms to organize and the union wage simulation of the model establishes that skill biased technological change which affects the productivity of skilled labor relative to unskilled labor can potentially explain the observed paths for union membership and income inequality

unionism and wages a longitudinal analysis the impact of unionism on relative wage rates is a topic of long standing interest in labor economics over the years researchers have used a variety of approaches to estimate the wage advantage associated with union membership initially researchers compared the average wages of union and nonunion workers in specific sectors such as an industry this approach has the obvious limitation of not accounting very well for the various quality or productivity differences that exist among workers differences that command compensating wage payments more recent studies have used cross section wage regressions to control for these other determinants of wages and thereby improve estimates of the union wage effect using large microeconomic data files containing detailed information on characteristics of individual workers numerous studies have estimated wage regressions that include controls for worker characteristics education experience etc and a dichotomous variable indicating union membership status as explanatory variables 2 the coefficient of the union membership variable in these regressions is taken as an estimate of the average impact that unionism has on wage rates controlling for measured differences in characteristics among workers unfortunately the wage regression approach does not completely resolve the problem of standardizing the union nonunion wage comparison for differences in worker quality even with detailed microdata on the characteristics of individual workers it is simply not possible to specify a set of variables that completely captures all worker specific differences in productive ability some aspects of human capital are too subtle to be operationally specified and included in a wage regression although they are recognized and paid for by employers to the extent that these unmeasured worker specific differences are correlated with union membership the wage regression will incorrectly attribute a relative wage impact to unionism 3 an alternative measurement approach that has several advantages over the wage regression is to compare the wage received by the same worker as a union and nonunion member in the past data limitations have prevented researchers from making such a comparison since only a small portion of workers change union status in a given period an unusually large longitudinal file is needed to yield a sufficient number of observed changes for a meaningful analysis 4 recently however large longitudinal data files on individuals participating in the current population survey have become available this paper uses these data to estimate the impact a change in union status has on the worker s wage the

aggregation of malmquist productivity indexes allowing for reallocation of resources in this paper we consider aggregate malmquist productivity index measures which allow inputs to be reallocated within the group when in output orientation this merges the single period aggregation results allowing input reallocation of nesterenko and zelenyuk 2007 with the aggregate malmquist productivity index results of zelenyuk 2006 to determine aggregate malmquist productivity indexes that are justified by economic theory consistent with previous aggregation results and which maintain analogous decompositions to the original measures such measures are of direct relevance to firms or countries who have merged making input reallocation possible allowing them to measure potential productivity gains and how these have been realised or not over time

premiums to employment in larger establishments evidence from peru abstract examination of the employer size wage effect for males in urban peru suggests the following higher wages in larger establishments do not merely compensate for higher worker quality or inferior working conditions size differences in the use of rising wage tenure profiles cannot provide a market clearing explanation for the employer size wage effect unless workers are extremely impatient thus larger employers appear to pay premiums unionization explains none of the premiums and minimum wage compliance explains at best a small fraction shirking based efficiency wage explanations for premiums are implausible because peruvian job security legislation greatly inhibits dismissals in larger establishments explanations meriting further research involve the use of high wages to reduce turnover and to improve productivity enhancing morale

flexible contracts and subjective well being theory suggests that when workers choose between permanent and flexible contracts their utility should tend to equalize across contract types new estimates of job satisfaction show the critical role played by unmeasured worker heterogeneity they reveal that flexible contracts are a strong negative determinant of satisfaction with job security but are often a positive determinant of other dimensions of job satisfaction as a consequence flexible contracts have either a weak negative influence or no influence on overall job satisfaction moreover flexible contracts generally have no impact on overall life satisfaction of the employed these results appear broadly consistent with the presence of equalizing differences jel j28 j41

union incidence in the public and private sectors union density in the public sector is approximately twice the level of that in the private sector in both canada and the united states canadian data are particularly useful for analysing differences between the public and private sectors because of several industries that have a substantial overlap of ownership between sectors sectors therefore may be compared while holding the industry constant evidence is presented suggesting that union cost factors as related to the size of the plants are important in explaining the high density in the public sector employee characteristics appear to play no role the connection between wage differentials and public sector unionism is also addressed

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

cabinet survival and competing risks we attempt to resolve a recent controversy in the study of cabinet terminations pertaining to the shape of hazard rates on the one hand warwick 1992b provides evidence that cabinets are more likely to terminate the longer they are in office alt and king s 1994 analysis on the other hand suggests that hazard rates are constant over the life time of a cabinet this issue is of particular theoretical importance since a constant hazard rate would add support to the nonstrategic model of cabinet termination due to browne et al 1986 while an increasing hazard rate would seem to favor lupia and strom s 1995 strategic approach by applying a semi parametric competing risk approach to data on cabinet durations we are able to show that through its use of theory based censoring the previous literature in effect analyzed only one mode in which cabinets terminate the case where one cabinet is replaced by another without a new election once cabinet terminations that lead to chamber dissolutions with subsequent elections are analyzed directly we can show that they are governed by a very different stochastic process hazard rates are not flat as in the case of replacements but increase over the life of the government further the covariates governing replacement terminations fail to explain dissolution terminations these findings add support to the strategic approach suggested by lupia and strom

compensating differentials for shift work a model analyzing the choice of shift is developed and estimated using data from two supplements to the current population survey the findings show a positive wage premium for shift work that varies with personal characteristics and there is strong evidence showing the importance of self selection as workers with low potential daytime earnings are more likely to choose night work and supplement their earnings the findings demonstrate that cross section estimates of wage premiums for union membership and firm size are biased upward because they pick up some of the compensating differential for shift work

testing for efficiency catching up we used advances in data envelopment analysis dea techniques to examine efficiency scores and investigate the issue of convergence and divergence in a cross country analysis specifically we used bootstrapping techniques to examine a data set of 52 developed and developing countries we found that when using the standard dea model some of the results were not robust further we broke the sample into groups to examine club convergence we found that efficiency scores were significantly different between groups and that there was some evidence of convergence of efficiency scores within each group

efficiency and internal organization works councils in west german firms efficiency voice theory has not explained why highly competent managers cannot maintain effective communication without formal or mandatory institutions of l abor s voice powerful west german works councils are negatively rela ted to productivity in the sample suggesting that the best managers can do better without councils however excessive pressure on worker s should encourage both unionization and councils to gain compensatin g differentials and the simultaneous wls tobit estimates also suppor t this effect general productivity benefits from formal voice organi zation are strongly rejected but evaluating welfare efficiency and causality directly requires data on job satisfaction and managerial ability copyright 1987 by the review of economic studies limited

political parties and monetary commitments we argue that political parties will choose monetary institutions in order to help them win elections and retain office increased levels of economic openness in the industrial democracies have complicated the pursuit of office by altering the policy preferences of constituents and decreasing the ability of cabinet ministers to deliver promised economic outcomes we contend that monetary commitments can help political parties manage diverse constituent interests restore policy effectiveness and ultimately maintain their position in office therefore we expect that fixed exchange rates and central bank independence can improve cabinet durability especially under conditions of economic openness in the first section we discuss how fixed exchange rates and central bank independence can insulate cabinets from the political shocks of increased economic openness to determine the political value of these commitments we then test the effect of exchange rate commitments and central bank independence on cabinet durability in the second section in the third section we use the results of our statistical models to generate expected cabinet durability for the countries in our sample under alternative institutional configurations by comparing the expected durabilities we show that most monetary reforms have helped or at least not hurt expected cabinet durability

downsizing in the german chemical manufacturing industry during the 1990s why is small beautiful the german chemical manufacturing industry experienced major downsizing between 1992 and 2004 with the average size of firms shrinking by nearly half during this period this study uses modern frontier efficiency analysis to investigate the determinants of this downsizing based on reliable census data the results of this analysis suggest that firms were not primarily concerned with improving technical efficiency but with establishing an optimal scale of production the proportion of scale efficient firms has been persistently increasing and downsizing is found to be a rational conduct because all scale inefficient firms have continually operated under the decreasing returns portion of technology

union wage settlements during a disinflation this paper examines the role of union wage contracts in the persistence of inflation and the implication of these contracts for the problem of disinflation in the united states a quantitative model of overlapping con tracts explicitly oriented toward the major union sector is developed the model takes account of expectations of future wage price and employment conditions as in more aggregated models that have been used in macroeconomic research in addition the distribution of workers according to contract length as well as deferred wage increases and escalator clauses are explicitly used in the model the main aim of the model is to determine the constraints which these contracts impose on disinflation paths the model indicates that the maximum speed of disinflation is extremely slow in the early phases if a rise in unemployment is to be avoided but increases considerably before the new lower rate of inflation is reached the disinflation path is considerably slower than that observed after hyperinflation periods however the existence of a path of inflation reduction raises questions about whether the institution of union wage con tracts is really the direct cause of costly disinflations or whether their influence works indirectly by raising credibility problems about a monetary disinflation this abstract was borrowed from another version of this item

nominal and real union wage differentials and the effects of industry and smsa density 1973 83 many studies have examined the influence of union density union members as a percentage of all workers on earnings in the private sector but few such studies have looked at the public sector using data from the 1991 current population survey this

aggregation of malmquist productivity indexes in this paper we extend the work of fare and zelenyuk 2003 on aggregate farrell efficiency scores european journal of operational research 146 3 615 620 to find a theoretically justified method of aggregating malmquist productivity indexes over individual decision making units firms countries etc into a group malmquist productivity index we also consider the aggregation of decomposed parts of the malmquist productivity index to obtain a decomposition of the malmquist productivity index for a particular group c 2005 elsevier b v all rights reserved

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

teams teamwork and absence we argue that firms with interdependent worker productivity team production have a higher cost of absence and as a consequence spend additional resources on monitoring absence as a result firms with team production should have lower absence rates we estimate the determinants of absence for blue collar workers using a sample of german manufacturing establishments workplace teams are used as a proxy for team production the estimates reveal that firms with teams have lower absence rates as do smaller establishments the size effect however is unique to establishments with teams which fits prior theoretical work that has not been previously tested

unionism in a competitive industry this article explores a model in which a union confronts many competitive workers firms and consumers under monopoly unionism union coverage may be incomplete then union wages and employment are insensitive to product demand variation under efficient unionism coverage can never be incomplete some union variables necessarily vary with product demand preliminary evidence on the demand independence under incomplete coverage hypothesis is presented also more structure is imposed and further hypotheses are derived and the manner in which the model can be enriched to allow for a variety of union related issues within a consistent framework is set out

an empirical model of employed search unemployed search and nonsearch the 1969 1971 national longitudinal surveys data on young men were used to study the employed worker s choice among employed search unemployed search and not searching for a new job we assume that an unobserved variable search intensity governs this choice such that unemployed search involves a greater intensity than employed search which of course is associated with greater intensity than nonsearch the principal results are that current wages seniority collective bargaining coverage employment outside construction and employment by government are each ceteris paribus negatively associated with search intensity further each of these variables lowers the probability of not searching and raises the probabilities of employed and unemployed job search

do unions capture monopoly profits this paper challenges the conclusion reached in recent studies that unions reduce profits exclusively in highly concentrated industries from their review of previous studies and their analysis of 1977 data on 367 fortune 500 firms the authors conclude that there is no convincing evidence that concentration produces monopoly profits for unions to capture moreover they find that the union wage effect is not greater in concentrated industries as suggested by the hypothesis that unions capture concentration related profits evidence is found suggesting that a firm s market share its expenditures on research and development and its protection from foreign competition provide more likely sources for union rents than does industry concentration several recent studies have found that unions reduce profits significantly and some have concluded that this profit reduction is restricted to highly concentrated industries both conclusions are important the finding that unions reduce profitability indicates that in general the cost increasing effects of unions outweigh any positive productivity effects they may bring to the workplace such a

union effects on productivity profits and growth has the long run arrived this article interprets literature examining union effects on economic performance production function studies indicate small overall union impacts on productivity positive effects where they exist appear to result from management response to decreased profit expectations and from a natural selection process lower profitability among unionized firms is well established more interesting is the possibility that unions appropriate quasi rents deriving from long lived tangible and intangible capital the connection between unions investment behavior and productivity growth emerges as a particularly fruitful line of empirical inquiry although it does not encourage a sanguine view of unionism s long run impact

heterogeneous firms and the organization of production firms in the same industry exhibit systematic differences in the organization of production and the structure of employment entrepreneurial ability is the specific scarce input that limits the size of a firm this input must be allocated to two activities coordinating production and monitoring workers able entrepreneurs can convert calendar time into larger supplies of coordinating effort that enable them to assemble large firms greater ability implies a higher shadow price of time which increases the implicit costs of monitoring a dispersion of entrepreneurial abilities generates an equilibrium size distribution of firms differences in monitoring costs affect the choice of worker productivities the design of products and the organization of production the monitoring cost hypothesis advanced in this paper goes a long way in explaining the equilibrium of an industry containing heterogeneous firms that differ in size and behavior

a unified model of cabinet dissolution in parliamentary democracies the literature on cabinet duration is split between two apparently irreconcilable positions the attributes theorists seek to explain cabinet duration as a fixed function of measured explanatory variables while the events process theorists model cabinet durations as a product of purely stochastic processes in this paper we build a unified statistical model that combines the insights of these previously distinct approaches we also generalize this unified model and all previous models by including 1 a stochastic component that takes into account the censoring that occurs as a result of governments lasting to the vicinity of the maximum constitutional interelection period 2 a systematic component that precludes the possibility of negative duration predictions and 3 a much more objective and parsimonious list of explanatory variables the explanatory power of which would not be improved by including a list of indicator variables for individual countries

new evidence on unions and plant closings britain in the 1990s in this paper we exploit the longitudinal element of the 1990 and 1998 workplace employee relations surveys for britain to investigate the effect of unionism on establishment closings contrary to both recent u s research and long standing british work we find a strong positive association between two measures of unionism union recognition for collective bargaining purposes and union coverage and plant closings this association is robust to the inclusion of highly detailed industry controls but is driven by plants that are parts of multiestablishment entities no such relationship obtains in the case of single plant enterprises in explaining our findings we address their consistency with the widely perceived reduction in the disadvantages of british unionism in recent years

unions and hospitals some unresolved issues abstract this article investigates the impact of unions on the wages of hospital workers our ols findings agree with previous ols studies unions increase registered nurses rns wages by five percent and by about eight to ten percent for other hospital workers by contrast we find after correcting for selectivity bias in hospital unionization status a direct union effect of about twenty percent on rn wages and in excess of thirty percent on wages of other hospital workers while the results based on selectivity bias adjustments make us uneasy we do not reject them out of hand we also find indirect union effects up to five percent by other unionized occupations within a hospital and up to ten percent by other unionized hospitals in the local labor market prospective reimbursement programs have a negative impact on the wages of hospital workers but are only significant for non unionized occupations our three empirical tests of monopsony all reject the view that monopsony is a factor in hospital wage setting even considering the large union effects based on selectivity bias adjustment we conclude that unions have been a minor contributor to hospital cost inflation