Unions, Dynamism, and Economic Performance

This paper explores the relationship between economic performance and US unionism. It first focuses on what we know based on empirical research that has been handicapped by limited data on establishment and firm level collective bargaining coverage. Evidence on the relationship of unions with wages, productivity, profitability, investment, debt, employment growth, and business failures are all relevant in assessing the future of unions and public policy with respect to unions. A reasonably coherent story emerges from the empirical literature, albeit one that rests heavily on evidence that is dated and unable to identify truly causal effects. The paper’s principal thesis is that union decline has been tied fundamentally to competitive forces and economic dynamism. Implications of these findings for labor law policy and the future of worker voice institutions is discussed briefly in a final section. Prepared for the volume, Research Handbook on the Economics of Labor and Employment Law, Cynthia Estlund and Michael Wachter, editors, Edward Elgar Series under the editorial oversight of Richard Posner and Francesco Parisi, "Research Handbooks in Law and Economics." 1