Investment and Union Certification

Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series 96-43

Posted: 11 Dec 1996  

Bruce Fallick

Federal Reserve Bank of Cleveland - Research Department

Kevin A. Hassett

American Enterprise Institute (AEI)

Date Written: May 1996

Abstract

A growing body of work--both theoretical and empirical--has emphasized that unionization may be better understood as a tax on capital rather than a tax on labor. Under this "new" view, unionization unambiguously lowers investment. Using data on union certification elections, we estimate the impact of unionization on firms' investment behavior. Employing both a standard q-model and an "investment surprises" technique, we find that union certification significantly reduces investment. We find that a winning certification election has, on average, about the same effect on investment as would a 30 percentage point increase in the corporate tax.

JEL Classification: J51, D24

Suggested Citation

Fallick, Bruce and Hassett, Kevin A., Investment and Union Certification (May 1996). Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series 96-43. Available at SSRN: https://ssrn.com/abstract=3652

Bruce C. Fallick (Contact Author)

Federal Reserve Bank of Cleveland - Research Department ( email )

1455 East 6th Street
Cleveland, OH 44101-1387
United States
216-579-2970 (Phone)
216-579-3050 (Fax)

Kevin A. Hassett

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States
202.862.7157 (Phone)
202.862.7177 (Fax)

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