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Unionisation Structures, Productivity, and Firm Performance

34 Pages Posted: 12 May 2009  

Sebastian Braun

Kiel Institute for the World Economy - IFW

Date Written: May 12, 2009

Abstract

This paper studies how different unionisation structures affect firm productivity, firm performance, and consumer welfare in a monopolistic competition model with heterogeneous firms and free entry. While centralised bargaining induces tougher selection among heterogeneous producers and thus increases average productivity, firm-level bargaining allows less productive entrants to remain in the market. Centralised bargaining also results in higher average output and profit levels than either decentralised bargaining or a competitive labour market. From a welfare perspective, the choice between centralised and decentralised bargaining involves a potential trade-off between product variety and product prices. Extending the model to a two-country setup, I furthermore show that the positive effect of centralised bargaining on average productivity can be overturned when firms face international low-wage competition.

Keywords: Trade Unions, Productivity, Firm Performance, International Competition

JEL Classification: J50, D43, F16

Suggested Citation

Braun, Sebastian, Unionisation Structures, Productivity, and Firm Performance (May 12, 2009). Available at SSRN: https://ssrn.com/abstract=1403055 or http://dx.doi.org/10.2139/ssrn.1403055

Sebastian Till Braun (Contact Author)

Kiel Institute for the World Economy - IFW ( email )

United States

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