Technical Efficiency, Unions and Decentralized Labor Contracts

31 Pages Posted: 31 Oct 2016

See all articles by Francesco Devicienti

Francesco Devicienti

University of Turin - Collegio Carlo Alberto; University of Turin - Department of Economics and Financial Sciences G. Prato

Alessandro Manello

Independent

Davide Vannoni

Faculty of Economics- University of Torino

Abstract

This paper explores the link between the presence of unions in the workplace, the adoption of decentralized labor agreements and technical efficiency, using a large sample of Italian manufacturing firms. We apply the Data Envelopment Analysis, and its robust version based on bootstrap theory, to get reliable estimates of technical efficiency at the firm level in a standard first stage. We devote particular attention to the specific technology adopted, by distinguishing 20 different sector frontiers, as well as to the presence of outliers.The obtained efficiency scores are analyzed in a second stage applying a truncated regression model estimated via Maximum Likelihood, following the Simar and Wilson (2007, 2011) methodology. Our results highlight that the presence of workplace unionization decreases the level of technical efficiency, while aspects limiting the unions' power such as a strong exposure to international markets, high debt levels or the prevalence of flexible assets partially reduce the negative effect. However, when firms adopt decentralized labor contracts agreements, the effect on efficiency is positive and partially compensates the negative unions' effect. The results are robust to the inclusion of many firm characteristics and to different model specifications.

Keywords: technical efficiency, trade unions, decentralized bargaining, data envelopment analysis, truncated regression model

JEL Classification: J51, D22, D24, C24, C44

Suggested Citation

Devicienti, Francesco and Manello, Alessandro and Vannoni, Davide, Technical Efficiency, Unions and Decentralized Labor Contracts. IZA Discussion Paper No. 10292. Available at SSRN: https://ssrn.com/abstract=2861077

Francesco Devicienti (Contact Author)

University of Turin - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy

Alessandro Manello

Independent ( email )

No Address Available
United States

Davide Vannoni

Faculty of Economics- University of Torino ( email )

Corso Unione Sovietica 218bis
10134 Torino
Italy
+39+011+7716806 (Phone)
+39+011+6706062 (Fax)

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