Labor Unions and Political Polarization within Firms

Abstract

Labor organizations mobilize employees for political purposes. In this study, we examine how labor unions stimulate political polarization within firms. We combine datasets on employee-level political contributions and union elections in the United States. In a regression discontinuity design, we find unionization increases employees’ political contributions to democratic candidates, intensifying the polarization among American firms previously perceived to support the republican party. The union-induced polarization impedes a firm’s productivity, talent retention, and innovation activities. We thus provide a novel channel for the negative impact of unions on innovation (Bradley and Tian, 2017).

Keywords: unions, political contributions, innovation, polarization

JEL Classification: J51, O31, D72