Union Rent Seeking, Intangible Capital, and Market Value of the Firm

Connolly, Robert A.; Hirsch, Barry T.; Hirschey, Mark

doi:10.2307/1924515

Cited by 269 publications

(212 citation statements)

References 26 publications

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“…The theoretical origins for this literature reach back to Simons (1944); influential papers include Baldwin (1983) and Grout (1984). The earliest empirical paper in this literature appears to be Connolly et al (1986). Rent-seeking models focus on the fact that unions capture some share of the quasirents that make up the normal return to investment in long-lived capital and R&D. "Rationally myopic"…”

Section: Investment In Tangible and Intangiblementioning

confidence: 99%

“…Stated alternatively, wage increases to unions are in part a tax on capital and need not lead firms to shift their factor mix away from labor and toward capital (Hirsch and Prasad 1995;Addison and Chilton, 1996). 19 Union rent seeking reduces investment not only in physical capital but also in R&D and other forms of innovative activity (Connolly et al, 1986). The stock of knowledge and improvements in processes and products emanating from R&D are likely to be relatively long-lived and firm specific.…”

Section: Investment In Tangible and Intangiblementioning

confidence: 99%

“…Unionized companies may be more likely to patent, given their stock of innovation capital, to reduce union rent appropriation (Connolly et al, 1986). Although the patent application process is often costly and reveals trade secrets, patents offer firms opportunity to license product and process innovations and transform what might otherwise be firm-specific innovative capital into general capital, and lessen a union's ability to appropriate the quasi-rents from that capital.…”

Section: Investment In Tangible and Intangiblementioning

confidence: 99%

See 2 more Smart Citations

What Do Unions Do for Economic Performance?

Hirsch

2017

What Do Unions Do?

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor, (2) internationalization of labor markets, (3) welfare state and labor market, (4) labor markets in transition countries, (5) the future of labor, (6) evaluation of labor market policies and projects and (7) general labor economics. Terms of use: Documents inIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available on the IZA website (www.iza.org) or directly from the author. This essay assesses their analysis of how unions in the U.S. private sector affect economic performance -productivity, profitability, investment, and growth. Freeman and Medoff are clearly correct that union productivity effects vary substantially across workplaces. Their conclusion that union effects are on average positive and substantial cannot be sustained, subsequent evidence suggesting an average union productivity effect near zero. Their speculation that productivity effects are larger in more competitive environments appears to hold up, although more evidence is needed. Subsequent literature continues to find unions associated with lower profitability, as noted by Freeman and Medoff. Unions are found to tax returns stemming from market power, but industry concentration is not the source of such returns. Rather, unions capture firm quasi-rents arising from long-lived tangible and intangible capital and from firm-specific advantages. Lower profits and the union tax on asset returns leads to reduced investment and, subsequently, lower employment and productivity growth. There is little evidence that unionization leads to higher rates of business failure...

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Section: Investment In Tangible and Intangiblementioning

confidence: 99%

Section: Investment In Tangible and Intangiblementioning

confidence: 99%

Section: Investment In Tangible and Intangiblementioning

confidence: 99%

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What Do Unions Do for Economic Performance?

Hirsch

2017

What Do Unions Do?

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“…To measure labor force unionization rate (UNION), we follow Connolly, Hirsch and Hirschey [32] and measure unionization in industry i in time t as the percentage of employed workers in a firm's primary industry covered by unions in the collective bargaining with the employers, i.e. :…”

Section: Variable Descriptionsmentioning

confidence: 99%

Trade Liberalization, Import Penetration and Unionization: The U.S. Experience

Gurun¹,

Booth²

2016

TEL

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In the aftermath of World War II there has been a worldwide trend for countries to pursue policies to enhance free trade in order to improve their economic wellbeing. Nevertheless the benefits are associated with free trade and many generate unwanted consequences to segments of a nation's populace. With this thought in mind, we investigate the impact of import penetration originating from low-wage countries on the unionization rates in U.S. We find that import penetration originating from low-wage countries decreases unionization rates, with a 1% increase in import penetration reducing unionization rates by slightly less than 2% within three years after controlling for several factors that may affect unionization rates. If only imports from China and India (both low-wage countries) are considered, the reduction almost doubles. Our findings are consistent with the argument that firms are reluctant to collaborate and contract with unions that ask for sticky labor costs and multiyear contracts because these provisions often result in declining profit margins.

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“…First, a large body of literature has investigated labor union effects on R&D investments [16,18,[56][57][58][59][60][61][62][63]. Almost all of the existing research indicates that labor unions have a negative effect on R&D investment.…”

Section: Labor Unions and Firm Randdmentioning

confidence: 99%

Labor Union Effects on Innovation and Commercialization Productivity: An Integrated Propensity Score Matching and Two-Stage Data Envelopment Analysis

et al. 2015

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Abstract:Research and development (R&D) is a critical factor in sustaining a firm's competitive advantage. Accurate measurement of R&D productivity and investigation of its influencing factors are of value for R&D productivity improvements. This study is divided into two sections. The first section outlines the innovation and commercialization stages of firm-level R&D activities. This section analyzes the productivity of each stage using a propensity score matching (PSM) and two-stage data envelopment analysis (DEA) integrated model to solve the selection bias problem. Second, this study conducts a comparative analysis among subgroups categorized as labor unionized or non-labor unionized on productivity at each stage. We used Korea Innovation Survey (KIS) data for analysis using a sample of 400 Korean manufacturers. The key findings of this study include: (1) firm innovation and commercialization productivity are balanced and show relatively low innovation productivity; and (2) labor unions have a positive effect on commercialization productivity. Moreover, labor unions are an influential factor in determining manufacturing firms' commercialization productivity. OPEN ACCESSSustainability 2015, 7 5121

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Union Rent Seeking, Intangible Capital, and Market Value of the Firm

Cited by 269 publications

References 26 publications

What Do Unions Do for Economic Performance?

What Do Unions Do for Economic Performance?

Trade Liberalization, Import Penetration and Unionization: The U.S. Experience

Labor Union Effects on Innovation and Commercialization Productivity: An Integrated Propensity Score Matching and Two-Stage Data Envelopment Analysis

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