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

the political economy of corporate control and labor rents in a democracy a political majority can influence both the corporate governance structure and the return to human and financial capital we argue that when financial wealth is sufficiently concentrated there is political support for high labor rents and a strong governance role for banks or large investors the model is consistent with the great reversal phenomenon in the first half of the twentieth century we offer evidence that in several financially developed countries a financially weakened middle class became concerned about labor income risk associated with free markets and supported a more corporatist financial system

consumption based and territory based carbon emissions intensity determinants and forecasting using club convergence across countries abstract understanding the dynamics of carbon emissions across time and space is important when formulating energy policies to minimise climate changes in the future if per capita carbon emissions or carbon intensity converge over time then any negotiation of multilateral agreements will be easier than if convergence is absent it is also possible for club convergence to exist where countries within a club converge but countries between clubs do not converge we examine the convergence of consumption based and territory based carbon emissions intensity across 70 countries we find two convergent clubs for consumption based emissions and three convergent clubs for territory based emissions increases in each of total factor productivity renewable energy consumption and urbanisation increase the odds of belonging to a low carbon emissions intensity club an increase in industry value added reduces the odds of belonging to a low carbon intensity club increases in total factor productivity can be obtained through effective macroeconomic policy while increasing renewable energy consumption may require structural changes in economies focused on transitioning to a low carbon economy under a business as usual forecasting scenario the number of consumption based carbon emissions intensity clubs increases between 2014 and 2030 making it more difficult to negotiate multilateral agreements on climate change in the future

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

stakeholder welfare and firm value abstract using data from the independent social choice investment advisory firm kinder lydenberg domini kld we construct a stakeholder welfare score measuring the extent to which firms meet the expectation of their non shareholder stakeholders such as employees customers communities and environment and find it to be associated with positive valuation effects an increase of 1 in the stakeholder welfare score leads to an increase of 0 587 in tobin s q furthermore the valuation effects vary across stakeholders and the aforementioned positive effects are driven by firms performance on employee relations and environmental issues these results suggest that stakeholder welfare in particular employee welfare and environmental performance represents intangibles such as reputation or human capital crucial for shareholder value creation rather than private benefits managers pursue for their own social or economic needs

income inequality and co2 emissions in the g7 1870 2014 evidence from non parametric modelling abstract we examine whether income inequality effected carbon emissions in what are now the world s wealthiest countries over the period 1870 2014 employing a non parametric panel estimation method with cross sectional and time varying coefficients we find that the relationship between income inequality and co2 emissions is highly non linear in terms of signs and significance the nonparametric coefficient function for income inequality is found to vary over the period 1870 2014 income inequality exhibits a significant positive effect from 1870 to 1880 and a significant negative impact from 1950 to 2000 on co2 emissions we also find that for extended periods between 1881 and 1949 and between 2000 and 2014 there is no significant relationship between the two variables

evaluating the evidence on union employment and wages using current population survey data for the years 1973 86 this study tests the hypothesis that the steep decline of union employment shares since 1973 is related to increases in union wages relative to nonunion wages the authors show that although the aggregate union wage premium has changed little since 1973 some industry specific premiums have risen substantially and the industries with the rising premiums are those experiencing declines in union employment shares the increase in the premium explains from 21 to 64 of the decline in union shares depending on the equation specification the paper also presents a detailed set of union wage premiums and employment shares for the sample period

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

private equity jobs and productivity private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance to evaluate these claims we construct and analyze a new dataset that covers us buyouts from 1980 to 2005 we track 3 200 target firms and their 150 000 establishments before and after acquisition comparing to controls defined by industry size age and prior growth buyouts lead to modest net job losses but large increases in gross job creation and destruction buyouts also bring tfp gains at target firms mainly through accelerated exit of less productive establishments and greater entry of highly productive ones jel d24 g24 g32

equal employment opportunity law and firm profitability based on a sample of 260 cases reported in the wall street journal between 1964 and 1986 this study finds that the equity value of firms charged with violating equal employment opportunity eeo laws fell at the time that a suit decision or settlement was announced most dramatically the value of firms involved in class action suits fell 15 6 percent on average around the time of the suit further the average loss to shareholders exceeds the amount firms are required to spend to settle the case this may be due to the expected costs of changing employment practices or to the information about the firm s management that is revealed by the case a staggering number of statutes amendments and court decisions regulating equal opportunity in employment have been passed during the past 25 years firms found guilty of violations of equal employment opportunity laws have been required to pay millions of dollars in back pay and to alter their employment practices to comply with the laws this study measures the costs to firms resulting from government and private lawsuits and the further costs of losing those suits i address this question by examining changes in the market value of the equity of firms at the time a lawsuit is filed for a violation of an equal employment opportunity eeo law and at the time a decision of guilty or a settlement

aggregate consumer behaviour and the measurement of inequality this paper presents an approach to inequality measurement based on an econometric model of aggregate consumer behaviour the novel feature of this model is that systems of individual demand functions can be recovered uniquely from the system of aggregate demand functions we present methods for evaluating social welfare based on an explicit social welfare function this social welfare function incorporates measures of individual welfare based on indirect utility functions for all consumer units we develop indexes of inequality based on actual and potential levels of social welfare

is the troika bad for the environment an analysis of eu countries environmental performance in times of economic downturn and austerity memoranda abstract in this paper we examine the effect of the current economic crisis on the environmental performance of the eu countries by employing hierarchical linear multilevel hlm modeling we find that for the period 2000 2015 a drop in the national gdp a recession effect as well as endorsing a memorandum of understanding mou for receiving a imf eu ecb financial rescue package a troika effect have non significant to positive impacts on a number of national environmental quality and policy indicators over and above other economic political and governance predictors for eurozone and non eurozone countries alike nevertheless this changes drastically if we examine these two factors interaction experiencing a recession while being a recipient of a troika sponsored rescue package has detrimental effects on an eu country s national environment

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

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

the politics of m a antitrust antitrust regulators play a critical role in protecting market competition we examine whether the political process affects antitrust reviews of merger transactions we find that acquirers and targets located in the political districts of powerful u s congressional members who serve on committees with antitrust regulatory oversight receive relatively favorable antitrust review outcomes to establish causality we use plausibly exogenous shocks to firm politician links and a falsification test additional findings suggest congressional members incentives to influence antitrust reviews are affected by three channels special interests voter and constituent interests and ideology in aggregate our findings suggest that the political process adversely interferes with the ability of antitrust regulators to provide independent recommendations about anticompetitive mergers

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

the political drivers of renewable energies policies this paper empirically analyzes how political factors affect the deployment of renewable energy re sources and compares their explanatory power to that of other economic energy and environmental drivers that have received greater attention in the literature so far the sample encompasses the eu countries bound to attain the target of 20 share of gross final energy consumption by 2020 the panel data analysis shows that lobbying by the manufacturing industry negatively affects re deployment whereas standard measures of government quality show a positive effect furthermore left wing parties promote the deployment of re more than right wing parties

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

the efficiency of capital allocation in this paper we present an intertemporal general equilibrium model of the u s economy the purpose of this model is to analyze the efficiency of capital allocation we have implemented our model econometrically for annual data covering the period 1955 80 the model encompasses the critical features of u s tax laws applicable to income from capital equilibrium is determined by market clearing conditions for consumption and investment goods and for capital and labor services in each time period under perfect foresight there exists a unique balanced growth equilibrium corresponding to any stationary tax policy an intertemporal general equilibrium model of the u s economy is presented in this paper the purpose of this model is to analyze the efficiency of capital allocation the model is kindred in spirit to the model of the swedish economy developed by ragnar bentzel 1978

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

approaches to efficient capital taxation leveling the playing field vs living by the golden rule this paper analyzes intersectoral and intertemporal efficiency effects of the tax reform act of 1986 using a general equilibrium model that considers impacts of taxes on the allocation of capital across industries assets sectors and time the model pays close attentiona to capital adjustment dynamics we find that the 1986 reform worsened the intertemporal efficiency of resource allocation by increasing marginal effective tax rates on various uses and types of capital this negative efficiency effect is more that offset however by postivie effects from an improved intersectoral allocation of capital and a reduction of labor market distortions

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

bank credit and trade credit evidence from natural experiments abstract prior studies find mixed evidence about the substitution relation between bank credit and trade credit in this paper using two bank interest rate deregulations in china we revisit the substitution hypothesis by examining how exogenous increases in the availability of bank credit affect trade credit we find that firms with higher credit risk increased their use of bank credit and reduced their use of trade credit after the 2004 bank interest rate ceiling deregulation whereas firms with lower credit risk increased their use of bank credit and reduced their use of trade credit after the 2013 bank interest rate floor deregulation our results provide supportive evidence for the substitution hypothesis that firms reduce their use of trade credit after the relaxation of bank credit and suggest that bank credit is more favorable short term financing than trade credit

the environment left wing political orientation and ecological economics the objectives of this commentary are twofold the first is to examine the relationship between a party s position within the left right political spectrum and its stance on environmental issues as stated in party manifestos the second is to examine the relationship between individuals ideological orientation and pro environmental beliefs attitudes and self reported behavior equality distributional concerns and market skepticism are typically regarded as defining factors of left wing political orientation our results suggest that left wing parties and individuals are also more pro environmental than their right wing counterparts ecological economics similarly embraces sustainability efficient resource allocation and equitable distribution and is skeptical towards the ability of unregulated markets to achieve these objectives the hypothesis is put forward that ecological economics is more likely to be supported by left wing parties and individuals

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

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

corporatism as an impediment to ecological sustenance the case of finnish waste management abstract this study set out to improve the capacity of finnish policy makers to design and implement long term waste management policies since policy makers must frequently act on incomplete information and process the information they receive through mental models that can lead to inefficient or myopic choices the methodological approach was to analyze the structure substance and institutional context of the mental models with which key policy makers in finnish waste management rationalize their long term decisions individual scenarios were analyzed for inconsistencies that indicate how institutions constrain policy decisions and what institutional changes might enable policy makers to better prepare for the long term future to map the cognitive models that underlie waste management policies interviews were conducted in 1992 with 24 decision makers and experts on finnish waste management the main finding is that the exclusion of long term ecological sustenance is a systemic built in characteristic of finnish corporatism corporatist institutions nurture environmental policy makers short sighted mental models which in turn are the rationale for the short sighted corporatist institutions the principle unifying the recommendations is the administrative and procedural separation of conflicting environmental policy interests and the simultaneous empowering of sustainable goals with appropriate institutions

taxing away m a capital gains taxation and acquisition activity abstract capital gains taxation distorts the market for corporate control by imposing a cost on selling shareholders in acquisitions this lock in effect increases premiums required for deal completion preventing some m as from taking place at all we estimate the effect of capital gains taxation on the quantity of realized m a deals and compute the deadweight loss related to taxing these transactions we find that a one percentage point increase in the capital gains tax rate reduces acquisition activity by around 1 annually for the united states this implies unrealized synergy gains of 9 3 billion each year due to capital gains taxes

how do mergers create value a comparison of taxes market power and efficiency improvements as explanations for synergies there is little evidence in the literature on the relative importance of the underlying sources of merger gains prior literature suggests that synergies could arise due to taxes market power or efficiency improvements based on value line forecasts we estimate the average synergy gains in a broad sample of 264 large mergers to be 10 03 of the combined equity value of the merging firms the detailed data in value line projections allow for the decomposition of these gains into underlying operating and financial synergies we estimate that tax savings contribute only 1 64 in additional value while operating synergies account for the remaining 8 38 operating synergies are higher in focused mergers while tax savings constitute a large fraction of the gains in diversifying mergers the operating synergies are generated primarily by cutbacks in investment expenditures rather than by increased operating profits overall the evidence suggests that mergers generate gains by improving resource allocation rather than by reducing tax payments or increasing the market power of the combined firm

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

welfare comparison under exact aggregation new econometric model of aggregate consumer behavior in the united states and to apply this model to the analysis of impacts of alternative economic policies on the welfare of individual consuming units the model incorporates time series data on quantities consumed prices the level and distribution of income and demographic characteristics of the population it also incorporates cross section data on the allocation of consumer expenditures for households with different demographic characteristics our econometric model is based on the theory of exact aggregation developed by lau 1977a c this theory makes it possible to dispense with the notion of a representative consumer in constructing models of aggregate consumer behavior one of the most remarkable implications of lau s theory of exact aggregation is that systems of demand functions for individuals with common demographic characteristics can be recovered uniquely from the system of aggregate demand functions using the individual demand functions we can analyze the impact of economic policy on consumer welfare

economic impacts of new unionization on private sector employers 1984 2001 economic impacts of unionization on employers are difficult to estimate in the absence of large representative data on establishments with union status information estimates are also confounded by selection bias because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages using multiple establishment level data sets that represent establishments that faced organizing drives in the united states during 1984 1999 this paper uses a regression discontinuity design to estimate the impact of unionization on business survival employment output productivity and wages essentially outcomes for employers where unions barely won the election e g by one vote are compared with those where the unions barely lost the analysis finds small impacts on all outcomes that we examine estimates for wages are close to zero the evidence suggests that at least in recent decades the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers because unions have been somewhat unsuccessful at securing significant wage gains

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

the efficiency gains from dynamic tax reform this paper presents a new simulation methodology for determining the pure efficiency gains from tax reform along the general equilibrium rational expectations growth path of life cycle economies the principal findings concern the effects of switching from a proportional income tax with rates similar to those in the u s to either a proportional tax on consumption or a proportional tax on labor income a switch to consumption taxation generates a sustainable welfare gain of almost 2 percent of lifetime resources in contrast a transition to wage taxation generates a loss of greater than percent of lifetime re sources a second general result is that even a mild degree of progressivity in the income tax system imposes a very large efficiency cost this abstract was borrowed from another version of this item

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

tax policy and capital allocation summary the purpose of this paper is to analyze the impact of u s tax policy on the efficiency of capital allocation to achieve this objective we employ an intertemporal general equilibrium model of the u s economy implemented econometrically for annual data covering the period 1955 1980 we present a detailed model of the provisions of u s tax law applicable to income from capital we use intertemporal equilibrium paths corresponding to alternative tax policies to evaluate proposals for tax reform we find that dramatic gains in economic welfare would result from a shift from direct to indirect taxation

domestic and international influences on green taxation economists have made a strong case for the relative efficiency of market based mechanisms for environmental regulation such as cap and trade and green taxes yet the spread of these forms has been limited and traditional command and control regulation still predominates the authors explain geographical and temporal variation in green tax burdens by considering their domestic and international determinants modeling international influences using spatial lags hypotheses are tested using panel data on organisation for economic co operation and development member states from 1995 to 2004 at the domestic level the authors show that green tax burdens are influenced by the left right and environmental positions of legislative medians and the power of the energy producing sector among other factors the authors also show that ideas about policy diffuse through international networks generated by trade and environmental intergovernmental organizations but they do not find compelling evidence for intern

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

are left wing party strength and corporatism good for the environment evidence from panel analysis of air pollution in oecd countries abstract the effect of left wing party strength and corporatism on air pollution levels in up to 21 oecd countries over the period 1980 or 1990 1999 is tested with both fixed effects and random effects estimators controlling for scale composition technique as well as aggregate time effects robust evidence is found that parliamentary green left libertarian party strength is associated with lower pollution levels the rise of ecologically oriented parties has thus had a real impact on air pollution levels traditional left wing party strength is possibly also associated with lower pollution levels but the evidence is less consistent and robust combined left wing party strength in government is possibly associated with higher pollution levels but this result is also far from robust and is practically small no evidence is found for a consistent systematic impact of corporatism on pollution levels

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

the incidence of taxes a dynamic macroeconomic analysis abstract this paper analyzes the incidence of various tax changes using the intertemporal optimizing framework developed by brock and turnovsky the model contains a reasonably complete specification of the corporate sector in which firms have the choice of financial structure it also allows for a range of government financial policies although only one is considered in detail both the short run and the long run effects of changes in the personal income capital gains and corporate profit tax rates are analyzed it is shown that the effects of tax changes a vary between the short and long run b the effects of tax changes depend critically upon the financial structure adopted by forms and c may also depend upon government financial policy

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

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

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 regulation of labor author s botero juan djankov simeon la porta rafael lopez de silanes florencio shleifer andrei abstract we investigate the regulation of labor markets through employment collective relations and social security laws in 85 countries we find that the political power of the left is associated with more stringent labor regulations and more generous social security systems and that socialist french and scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries however the effects of legal origins are larger and explain more of the variation in regulations than those of politics heavier regulation of labor is associated with lower labor force participation and higher unemployment especially of the young these results are most naturally consistent with legal theories according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems

labor market regulations and cross border mergers and acquisitions this article exploits changes in country level employment protection regulations as a source of plausibly exogenous variation in labor laws and finds that these regulations play an important role in cross border merger activity over the 1991 2009 period countries that tighten employment regulations attract more foreign acquirers especially those from countries with relatively more flexible labor regulations the results appear to be robust to alternative specifications importantly these patterns are pronounced in those recipient country sectors in which foreign acquirers may find attractive targets at bargain prices sectors with relatively high productivity and skill the article also provides evidence suggesting that because pro labor reforms allow foreign acquirers to cherry pick more skilled and productive local firms these transactions are associated with greater deal synergies and improved post merger operating performance

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

the real product market impact of mergers i document sources of value creation in mergers by analyzing novel data on the quality and price of goods sold by merging firms when two competitors in a product market merge their products converge in quality and prices fall relative to the competition these effects take two to three years to be fully realized and are stronger in mature industries prices do not fall however when the acquirer is diversifying into a new product market this direct evidence of real changes induced by merger activity is consistent with consolidation by related merging firms to achieve operational efficiencies and lower costs

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

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

modeling production for general equilibrium analysis the purpose of this paper is to present econometric models of producer behavior suitable for incorporation into a general equilibrium model implementation of these models requires a time series of inter industry transactions tables second implementation requires methods for estimation of parameters in systems of nonlinear simultaneous equations finally the economic theory of producer behavior implies equality and inequality restrictions on the parameters that must be incorporated into the estimation we discuss an empirical application to modeling producer behavior in thirty six industrial sectors of the u s economy

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

convergence in co2 emissions a spatial economic analysis with cross country interactions abstract this research analyzes the evolution of co2 emissions per capita in a sample of 141 countries during the period 1970 2014 the study develops a spatially augmented green solow model by taking into consideration technological externalities and interdependence in the process of production which ultimately implies that co2 emissions in an economy are affected by the economic characteristics in neighboring countries the empirical model predicts convergence in co2 emissions among countries which is examined by means of modern dynamic spatial panel econometric techniques the multimodal distribution of the co2 emissions is consistent with the existence of three spatial clubs the space time dynamics of the three clubs are analyzed by means of the local directional moran scatterplot and spatial panel model with heterogeneous parameters our analysis reveals the hypothesis of spatial convergence clubs is more consistent with the data than the hypothesis of conditional convergence

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

political competition and renewable energy transitions over long time horizons a dynamic approach abstract climate change mitigation requires sustainable energy transitions but their political dynamics are poorly understood this article presents a general dynamic model of renewable energy policy with long time horizons endogenous electoral competition and techno political path dependence we calibrate the model with data on the economics of contemporary renewable energy technologies in doing so we discover transition dynamics not present in economy energy models which ignore politics or in formal political economy models which ignore long term technological dynamics we show that the largest effects of partisan ideology on policy occur when the competing parties disagree on the importance of energy policy in these cases the less ideological party appeases the more ideological one while the more ideological party attempts to appease the electorate the results demonstrate that political dynamics could have large effects on the development of renewable energy and carbon dioxide emissions over time influencing the ability of countries to reach various climate mitigation trajectories

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

the welfare cost of capital income taxation in a growing economy the welfare cost of capital income taxation is analyzed in a general equilibrium framework where the private sector is represented by a competitive household endowed with perfect foresight and an infinite life the value of the welfare cost depends essentially on the elasticity of substitution between capital and labor in the production function numerical estimates are presented for different values of the parameters of the model the welfare gain obtained by the abolition of the capital income tax is smaller when the private sector is not endowed with perfect foresight it is reduced by about 40 percent when expectations are myopic the allocation efficiency cost of the corporate tax dwarfs the intertemporal welfare cost

rich enough to go renewable but too early to leave fossil energy abstract typically environmental kuznets curve ekc studies on energy concentrate on the emissions produced from energy production or consumption and neglect the aspect of exhaustion of a natural resource which is an irreversible result against any definition of sustainability and intergenerational equity this paper investigates whether there is an environmental kuznets curve for renewable energy whether there should be one and if there is what it should stand for for this reason the paper employs balanced panel data for 33 european member and candidate state countries that produce crude oil natural gas coal and renewable energy for the years 1990 2010 to investigate the relationship between their scale of economic activity fossil energy production and the production of renewable energy results from random effects models together with arellano bond estimator models identify the u shape for the environmental kuznets curve only for renewable energy and coal production a theoretical justification on the mechanisms possibly driving the environmental kuznets curve for renewable energy are also discussed

effects of political institutions on air quality we empirically test existing theories on the provision of public goods in particular air quality using data on sulfur dioxide so2 concentrations from the global environment monitoring projects for 107 cities in 42 countries from 1971 to 1996 the results are as follows first we provide additional support for the claim that the degree of democracy has an independent positive effect on air quality second we find that among democracies presidential systems are more conducive to air quality than parliamentary ones third in testing competing claims about the effect of interest groups on public goods provision in democracies we establish that labor union strength contributes to lower environmental quality whereas the strength of green parties has the opposite effect

enjoying the quiet life corporate governance and managerial preferences much of our understanding of corporations builds on the idea that managers when they are not closely monitored will pursue goals that are not in shareholders interests but what goals would managers pursue this paper uses variation in corporate governance generated by state adoption of antitakeover laws to empirically map out managerial preferences we use plant level data and exploit a unique feature of corporate law that allows us to deal with possible biases associated with the timing of the laws we find that when managers are insulated from takeovers worker wages especially those of white collar workers rise the destruction of old plants falls but the creation of new plants also falls finally overall productivity and profitability decline in response to these laws our results suggest that active empire building may not be the norm and that managers may instead prefer to enjoy the quiet life

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

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

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

unions and the financial performance of british private sector establishments summary this paper considers the relationship between unions and financial performance using data from the 1980 and 1984 workplace industrial relations surveys a qualitative indicator of financial performance is utilized and ordered probit estimates presented these indicate that unionized establishments are characterized by lower performance levels than are non union concerns the interface between union effects and relative market power is also explored and the ability of unions to extract a share of the available rents is found to be greater if the plants in which they are located possess a higher market share

union certification in ontario its effect on the value of the firm event study methodology is used to determine the effect of union certification in ontario on the expected profitability of firms raid and non raid applications and the method of certification are examined contrary to expectations we find no strong negative response to certification applications in most cases in general the more contentious the certification process the greater the negative abnormal returns this is not only true within ontario but also when our results are compared to those of the u s

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

factors determining energy consumption evidence from indonesia malaysia and thailand abstract the aim of this study is to verify empirically the impact of various factors on energy consumption in three asean countries namely indonesia malaysia and thailand over the period 1980 to 2012 after using sundry appropriate diagnostic tests for checking time series data the method of least square as an analytical technique is used for parameters estimation the findings validate that fdi inflows economic growth trade openness and human development index have positive and statistically significant impacts on energy consumption the other variable urbanization has positive and statistically significant impacts on energy consumption for thailand and indonesia only while the empirical results reveals that population growth rate has a positive and statistically significant relationship with energy consumption only in the case of malaysia so in the light of determinations of the study the policy implication is that energy policy needs to be orientated in favor of expanding the supply of energy to reach an enhanced degree of sustainable economic growth and development

firm leverage consumer demand and employment losses during the great recession this article argues that firms balance sheets were instrumental in the transmission of consumer demand shocks during the great recession using micro level data from the u s census bureau we find that establishments of more highly levered firms experienced significantly larger employment losses in response to declines in local consumer demand these results are not driven by firms being less productive having expanded too much prior to the great recession or being generally more sensitive to fluctuations in either aggregate employment or house prices likewise at the county level we find that counties with more highly levered firms experienced significantly larger declines in employment in response to local consumer demand shocks accordingly firms balance sheets also matter for aggregate employment our results suggest a possible role for employment policies that target firms directly besides conventional stimulus

relief for the environment the importance of an increasingly unimportant industrial sector deindustrialization stagnant real incomes of production workers and increasing inequality are latter day features of many economies it is common to assume that such developments pressure policymakers to relax environmental standards however when heavily polluting industries become less important economically their political importance also tends to diminish consequently a regulator may increase the stringency of environmental policies like some other studies we find that declining industrial employment translates into stricter environmental standards in contrast to previous studies but consistent with our argument we find that greater income inequality is associated with policies that promote a cleaner environment jel q58 p16 j31 c23