Abstract
How do unionization and collective bargaining affect firm profitability? In this paper, we revisit this question using a nationally representative sample of French establishments. In addition to examining union/non-union differences in profitability, we explore the possible sources from which unions capture profits. The results indicate that unionization in France is associated with poorer financial performance in the workplace. The results also indicate that concentration-related profits do not provide an important source of union rents in France. Finally, this study provides strong support for the hypothesis of union appropriation of the returns from long-lived physical capital.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
The legal context of union representation in France was changed by a law passed on August 20, 2008, since when union representation in the workplace has been reformed to improve social dialogue. A union now has to obtain at least 10% of electoral votes to be able to negotiate with an employer. Moreover, collective agreements are only valid if they are signed by one or more unions having at least 30% of votes and if union opposition has less than 50% of total votes cast.
The REPONSE survey is modeled in large part on the WIRS/WERS (Workplace Industrial/Employment Relations Survey) undertaken in the UK. The first REPONSE survey was carried out by the French Ministry of Labor in 1992, followed by two others in 1998 and 2004.
In 15% of workplaces covered by collective bargaining the agreement had not been signed. We ran the equivalent of the second model in Table 3, splitting the collective bargaining dummy into two categories, namely collective bargaining with a signed agreement and collective bargaining without one. Compared to the reference category of no union presence, the coefficients for this alternative model were:
-
bargaining but with no signed agreement: -0.474 (t = 3.48)
-
bargaining with a signed agreement: -0.221 (t = 2.10)
-
union delegate but no collective bargaining: -0.481 (t = 2.69).
-
References
Addison JT, Belfield C (2000) The impact of financial participation and employee involvement on financial performance: a re-estimation using the 1998 WERS. Scot J Pol Econ 47(5):571–583
Addison JT, Hirsch BT (1989) Union effects on productivity, profits and growth: has the long run arrived? J Lab Econ 7:72–105
Batt R, Welbourne T (2002) Performance growth in entrepreneurial firms: revisiting the union-performance relationship. In: Katz J, Welbourne T (eds) Research Volume in Entrepreneurship, vol 5. JAI Press
Bennett JT, Kaufman BE (eds) (2007) What do unions do? A 20-year perspective. Transaction Publisher, New Brunswick
Blanchflower DG, Bryson A (2009) Trade union and the economics of the workplace. In: Brown W, Bryson A, Forth J, Whitfield K (eds) The evolution of the modern workplace. Cambridge University Press, Cambridge, pp 48–73
Bryson A, Forth J, Kirby S (2005) High-performance practices, trade union representation and workplace performance in Britain. Scot J Pol Econ 53(3):451–491
Bryson A, Forth J, Laroche P (2009) Unions and workplace performance in Britain and France. CEP, London school of economics and political science, discussion paper 0920
Capon N, Farle JU, Hoenig S (1990) Determinants of financial performance: a meta-analysis. Manage Sci 36(10):1143–1159
Clark K (1984) Unionization and firm performance: the impact on profits, growth and productivity. Am Econ Rev 74:893–919
Connolly RA, Hirsch BT, Hirschey M (1986) Union rent seeking, intangible capital and market value of the firm. Rev Econ Stat 68:567–577
Coutrot T (1996) Relations sociales et performance économique: une première analyse empirique du cas français. Trav Empl 66:39–66
Delaney JT, Huselid M (1996) The impact of human resource management practices on perceptions of organizational performance. Acad Manage J 39(4):949–969
Doucouliagos C, Laroche P (2003a) What do unions do to productivity? A meta-analysis. Ind Rel 42(4):650–691
Doucouliagos C, Laroche P (2003b) Unions and productivity growth: a meta-analytic review. In: Kato T, Pliskin J. The determinants of the incidence and the effects of participatory organization. Elsevier Science JAI Book series 7:57–82
Doucouliagos C, Laroche P (2009) Unions and profits: a meta-regression analysis. Ind Rel 48(9):146–183
Drago R, Wooden M (1992) The Australian workplace industrial relations survey and workplace performance. Aus Bull Lab 142–167
Forth J, McNabb R (2008) Workplace performance: a comparison of subjective and objective measures in the 2004 workplace employment relations survey. Ind Rel J 39:104–123
Freeman RB (1983) Unionism, price-cost margin and the return to capital. National bureau of economic research, working paper 1164
Freeman RB, Medoff J (1984) What do unions do? Basic Books, New York
Freeman RB (2005) What do unions do? The 2004 M Brane Stringtwister edition. J Lab Res 26(4):641–668
Hirsch B (1991) Labor unions and the economic performance of firms. WE Upjohn Institute for Employment Research, Kalamazoo
Hirsch B (2003) What do unions do for economic performance? J Lab Res 25(3):415–456
Hirsch B, Addison J (1986) The economic analysis of unions: new approaches and evidence. Allen & Unwin, London
Hirsch B, Connolly R (1987) Do unions capture monopoly profits? Ind Labor Relat Rev 41(1):118–136
Jaccard J (2001) Interaction effects in logistic regression. Sage University paper series 07–135. Sage, Thousand Oaks
Karier T (1985) Unions and monopoly profit. Rev Econ Stat 67(1):34–42
Karier T (1988) New evidence on the effect of unions and imports on monopoly power. J Post Keynesian Econ 10(3):414–427
Laroche P (2002) L’influence des organisations syndicales de salariés sur la performance économique et financière des entreprises. Proposition et test d’un modèle explicatif dans le contexte français. PhD dissertation, Université de Nancy 2
Laroche P (2004) The impact of unions on workplace financial performance: an empirical study in the French context. In: Eaton A. Proceedings of the 56th annual meeting. IRRA (Industrial Relations Research Association) Series: 154–172
Lewis HG (1963) Unionism and relative wages in the United States: an empirical inquiry. University of Chicago Press, Chicago
Lewis HG (1986) Union relative wage effects: a survey. University of Chicago Press, Chicago
Machin S, Stewart M (1990) Unions and the financial performance of British private sector establishments. J Appl Econ 5:327–350
Machin S, Stewart M (1996) Trade unions and financial performance. Oxf Econ Pap 48:213–241
Metcalf D (2003) Unions impact and implications for future membership. In: Gregg P, Wadsworth J (eds) The state of working Britain. Manchester University Press, Manchester
Norton EC, Wang H, Ai C (2004) Computing interaction effects and standard errors in logit and probit models. Stata J 4(2):154–167
Salinger MA (1984) Tobin’s q, unionization and the concentration-profits relationship. Rand J Econ 15(2):159170
Szymanski DM, Bharadwaj SG, Varadarajan PR (1993) An analysis of the market share-profitability relationship. J Market 57(3):1–18
Turnbull P (2003) What do unions do now? J Labor Res 24(3):491–527
Voos PB, Mishel LR (1986) The union impact on profits: evidence from industry price-cost margin data. J Lab Econ 4:105–133
Author information
Authors and Affiliations
Corresponding author
Appendix
Appendix
Rights and permissions
About this article
Cite this article
Laroche, P., Wechtler, H. The Effects of Labor Unions on Workplace Performance: New Evidence from France. J Labor Res 32, 157–180 (2011). https://doi.org/10.1007/s12122-011-9106-9
Published:
Issue Date:
DOI: https://doi.org/10.1007/s12122-011-9106-9