Labor unrest and the quality of production
Subtitle: evidence from the construction equipment resale market
By: Alexandre Mas.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- no. 13138.; Working paper series (National Bureau of Economic Research) -- working paper no. 13138.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 48
Subjects: Caterpillar Tractor Company; Labor disputes -- Economic aspects; Construction equipment -- Economic aspects; Quality of products -- Mathematical models; Construction equipment industry -- United States -- Mathematical models
Description: This paper examines the construction equipment resale market to assess whether equipment produced by the world's largest manufacturer of construction machinery, Caterpillar, experienced lower product quality in facilities that underwent contract disputes during the 1990's. Analysis of auction data reveals that resale market participants significantly discounted machines produced in these dispute-affected facilities. Additionally, pieces of equipment produced in facilities undergoing unrest were resold more often, received worse appraisal reports, and had lower list prices. Taken together, the evidence supports the hypothesis that workmanship at dispute-affected facilities declined, and that the resulting impact on the economic quality of the equipment produced was significant. The dispute was associated with at least $400 million in lost service flows due to inferior quality equipment alone.
Notes: "May 2007"

Includes bibliographical references (p. 33-34).

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