Do Unions Reduce Investment? : Evidence from Canada

The authors test for a link between unionization and net investment rates in Canadian manufacturing. Analysis of data on 18 industries for the years 1967-87 reveals a negative non-linear relationship: the presence of unions appears to have reduced investment when the percentage of firms in the industry that were unionized was between 0% and approximately 50%, with a plateau or slight positive marginal effect above this level. In an industry moving from no unions to the mean level of unionization, net investment and gross investment are predicted to fall by 66-74% and 18-25%, respectively