R&D and Union Bargaining : Evidence from British Companies and Plants

U.S. research has found that unionization adversely affects research and development investment, consistent with the view that labor unions' rent-seeking activities act as a tax on innovation. In this U.K. study, preliminary analysis of two datasets (a cross-section of plants and a company panel for the years 1983-90) shows the same negative correlation. This correlation completely disappears, however, when controls are included for such factors as industry technological opportunity and cohort effects. Moreover, R&D intensity appears to have been higher where there were low levels of union density than where there was no union presence. Some evidence suggests that the difference between U.K and U.S. results may be due to cross-country differences in the prioritization of non-pay issues in bargaining