A model of unions, two-tier bargaining and capital investment

Cardullo, Gabriele; Conti, Maurizio; Sulis, Giovanni

doi:10.1016/j.labeco.2020.101936

Cited by 7 publications

(5 citation statements)

References 36 publications

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“…Affiliated firms are also more likely to be unionized, a factor that in the Italian context has been shown to be associated with higher capital investments (e.g. Cardullo et al., 2020). Moreover, affiliated companies seem to be in general more established, as they tend to be older, and they appear to be export oriented and better connected to public institutions, as they more often benefit from fiscal incentives.…”

Section: Regression Analysismentioning

confidence: 99%

Employer associations in Italy: Trends and economic outcomes

Fanfani

Lucifora

Vigani

2023

Brit J Industrial Rel

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This study analyses the representativeness of employer associations in Italy, using unique firm‐level data with information on employers' affiliation and their characteristics. We document that a persistent decline in affiliation rates to employers' associations has occurred during the last two decades. We show that affiliated companies are positively selected, as they tend to be larger, older, more likely to be located in richer regions, to be export and innovation oriented, and more likely to provide training. Using longitudinal data and regression decomposition techniques, we show that larger firms have been more affected by the decline in affiliation rates over time. Finally, we show that the level of representativeness of employers' associations has a weak positive effect on collective bargaining occupational wage minima settled by these organizations in national industry‐wide collective contracts after a negotiation process with trade unions.

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Section: Regression Analysismentioning

confidence: 99%

Employer associations in Italy: Trends and economic outcomes

Fanfani

Lucifora

Vigani

2023

Brit J Industrial Rel

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“…Firms' investment incentives for R&D and the hold-up problem associated with unionization in the context of strategic interaction, are also determined by the degree of centralization of wage bargaining. Here recent research has outlined two competing mechanisms that may influence firms' willingness to invest [9], [10].…”

Section: Bargaining Structure and Wage Centralizationmentioning

confidence: 99%

“…This reduces the expected duration of a vacant job position for capitalintensive firms, as they attract a larger number of job seekers. So capital remains unused for less time, softening the negative impact of the hold-up problem on investment [10].…”

Section: Bargaining Structure and Wage Centralizationmentioning

confidence: 99%

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Unions and investment in intangible capital

Sulis¹,

Cardullo²

2023

izawol

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While union density (the share of workers who belong to unions) is not very high in most developed countries, many more workers are covered by collective bargaining agreements, especially in continental EU countries. In France, the difference between coverage of collective bargaining agreements (76%) and union density (22.2%) was 53.8 percentage points in the mid-1970s and increased to 87.2 percentage points in 2016, as collective bargaining coverage increased to 98% and union density fell to 10.8%. Similarly, in Germany in 2018, approximately 17% of employees were union members, while collective bargaining contracts covered more almost 60% of employees. The share of covered employees is lower in the UK and the US, where union density and coverage of collective bargaining agreements largely coincide. In the UK, 78% of workers were covered by collective bargaining contracts in 1970, but that share fell to 26.9% in 2019. And in the US, collective bargaining contracts covered 26.1% of workers in 1977 but just 12.1% in 2020. This article discusses the effects of union power on investment in intangible capital, primarily research and development (R&D). It looks at the theoretical mechanisms at play and reviews the evidence on union effects for country case studies and cross-country studies. DISCUSSION OF PROS AND CONS Key theoretical insights Capital−labor substitution and the hold-up problemUnions may affect investment in tangible (physical) capital and intangible capital (mainly R&D) in different ways. The effects can be analyzed using two theoretical frameworks, which broadly correspond to the different views of unions that have been proposed in the literature. According to the so-called "standard model" [2], unions focus on raising wages, and firms subsequently react by cutting employment. In this framework, there are two possible effects on capital investment: firms may reduce investment in capital in order to reduce costs (scale effect), or they may substitute capital for labor, thus increasing capital investment (substitution effect) [2], [3].

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“…Calmfors and Driffill's (1988) classical work argued that both heavily centralised bargaining regimes and competitive regimes outperform regimes in the middle in terms of employment. More recent work shows that firm-level bargaining is actually superior to sectoral bargaining with regards to unemployment (Jimeno and Thomas, 2013) and that two-tier bargaining (i.e., also local bargaining) is superior to sectoral bargaining in relation to capital investment (Cardullo et al, 2020). Similarly, even if rent-sharing is introduced, which diminishes the differences, wages are always higher when determined at the firm-level compared to at the sectoral level (dePinto, 2019).…”

Section: Previous Literature Theorymentioning

confidence: 99%

Union Effects on Product and Technological Innovation

Bryson¹,

Dale‐Olsen²

2021

Research in Labor Economics

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We present theoretical and empirical evidence challenging early studies that found unions were detrimental to workplace innovation. Under our theoretical model, unions prefer product innovation to labour-saving technological process innovation, thus making union wage bargaining regimes more conducive to product innovation than competitive pay setting. We test the theory with population-representative workplace data for Britain and Norway. We find strong support for the notion that local bargaining leads to product innovation, either alone or together with technological innovation.

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A model of unions, two-tier bargaining and capital investment

Cited by 7 publications

References 36 publications

Employer associations in Italy: Trends and economic outcomes

Employer associations in Italy: Trends and economic outcomes

Unions and investment in intangible capital

Union Effects on Product and Technological Innovation

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