Labour Relations Quality and Productivity: An Empirical Analysis on French Firms

24 Pages Posted: 20 Aug 2012

See all articles by Gilbert Cette

Gilbert Cette

Banque de France

Nicolas Dromel

Paris School of Economics (PSE)

Remy Lecat

Banque de France

Anne-Charlotte Paret

Banque de France

Date Written: July 1, 2012

Abstract

This analysis characterizes empirically how good labour relations can alleviate the negative impact on productivity of regulatory constraints or workforce opposition. Our evidence of good labour relations lies in the existence of binding collective agreements, at the firm or at the industry level. The estimations are based on a unique dataset collected by the Banque de France about the obstacles French firms may face in increasing their utilization of production factors. Data are an unbalanced sample of 7,441 observations, corresponding to 1,545 companies, over the period 1991-2008. Our main results may be summarized as follows: ‘workforce or union opposition’ interacted with ‘regulatory constraints’ has a negative significant impact on total factor productivity (TFP). Regulatory constraints would become really binding when workers or unions use them as a tool to oppose management’s decisions; ‘regulatory constraints’ interacted with ‘branch or firm agreement’ has a positive significant impact on TFP. These agreements, which can only be obtained if labour relations are supportive, would be used by firms to offset the negative impact of regulatory constraints. These results confirm that labour relations quality, at the branch or the firm levels, is an important factor of productive performance.

Keywords: labour relation, collective bargaining, trade unions, productivity

JEL Classification: J53, J52, J51

Suggested Citation

Cette, Gilbert and Dromel, Nicolas and Lecat, Remy and Paret, Anne-Charlotte, Labour Relations Quality and Productivity: An Empirical Analysis on French Firms (July 1, 2012). Banque de France Working Paper No. 389, Available at SSRN: https://ssrn.com/abstract=2132401 or http://dx.doi.org/10.2139/ssrn.2132401

Gilbert Cette (Contact Author)

Banque de France ( email )

Paris
France

Nicolas Dromel

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

HOME PAGE: http://www.nicolas-dromel.com

Remy Lecat

Banque de France ( email )

Paris
France

Anne-Charlotte Paret

Banque de France ( email )

Paris
France

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