Abstract

http://ssrn.com/abstract=2232351
 
 

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The Causal Effect of Labor Unions on Innovation


Daniel J. Bradley


University of South Florida

Incheol Kim


University of New Orleans

Xuan Tian


Indiana University - Kelley School of Business - Department of Finance

December 15, 2013


Abstract:     
We examine the causal effect of unionization on firm innovation. To establish causality, we use a regression discontinuity design relying on “locally” exogenous variation generated by elections that pass or fail by a small margin of votes. Passing a union election leads to an 8.7% (12.5%) decline in patent quantity (quality) three years after the election. A reduction in R&D expenditures, reduced productivity of current and newly hired inventors, and departures of innovative inventors appear plausible mechanisms through which unionization impedes firm innovation. Our paper provides new insights into the real effects of unionization and has important implications for policy makers when they alter union regulations or labor laws to encourage innovation.

Number of Pages in PDF File: 45

Keywords: Innovation; labor unions; hold-up; shirking; inventor departures

JEL Classification: G31, O31, O32, J51

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Date posted: March 13, 2013 ; Last revised: October 8, 2014

Suggested Citation

Bradley, Daniel J. and Kim, Incheol and Tian, Xuan, The Causal Effect of Labor Unions on Innovation (December 15, 2013). Available at SSRN: http://ssrn.com/abstract=2232351 or http://dx.doi.org/10.2139/ssrn.2232351

Contact Information

Daniel J. Bradley
University of South Florida ( email )
Tampa, FL 33620
United States
Incheol Kim
University of New Orleans ( email )
2000 Lakeshore Drive
New Orleans, LA 70148
United States
Xuan Tian (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. Tenth Street
Bloomington, IN 47405
United States
812-8553420 (Phone)
824-8555875 (Fax)
HOME PAGE: http://kelley.iu.edu/tianx

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