THE EFFECT OF UNION DENSITY ON MULTI-FACTOR PRODUCTIVITY
This study investigates the direct effect of union density on multi-factor productivity growth, which is widely accepted as a measure of technical change in the economy. A regression analysis was conducted on a panel of 17 OECD countries over the period of 1990-2003. An indirect link between union density and multi-factor productivity (through union density's effect on research and development) has been established in the literature, but the existence of a direct effect has not previously been explored. This analysis has found that union density has a positive, but insignificant relationship with multi-factor productivity. While this finding signals that union density levels are positively related with multi-factor productivity to some extent, the indirect, negative effect of unions on multi-factor productivity is likely to outweigh the benefits of the positive relationship that has been uncovered in this essay. Policymakers should continue to create incentives for businesses to invest in R&D (which is the major route to growth in multi-factor productivity). Incentives to increase R&D will need to be balanced with the desire of policymakers to promote higher union density levels due to their positive effects on various other social measures, particularly income distribution.
Showing items related by title, author, creator and subject.
Industry, Technology, and Employment Program (Margaret Hilton) (United States. Congress. Office of Technology Assessment., 1993-09)