Unionization, Management Adjustment and Productivity

The effect of unionization on productivity is examined in this paper using time-series data on selected establishments in the U.S. cement industry. The analysis combines statistical estimation of the union impact and interviews with union and management officials to forge a link between econometric estimation and the traditional institutional analysis of union policy and management adjustment. The econometric analysis primarily deals with the problem of identifying the impact of the union in the face of firm specific effects and adjustments in labor quality. The case studies are designed to shed light on the question of how unionization affects productivity. The empirical results support the conclusion that unionization leads to productive changes in the operation of the enterprise. Evidence from the case studies suggests that much of the gain in productivity derives from a series of extensive changes in management personnel and procedure. These adjustments are a management response to changes in the employment contract which follow unionization.