Union Effects on Productivity, Profits, and Growth: Has the Long Run Arrived?

This article interprets literature examining union effects on economic performance. Production function studies indicate small overall union impacts on productivity; positive effects, where they exist, appear to result from management response to decreased profit expectations and from a natural selection process. Lower profitability among unionized firms is well established; more interesting is the possibility that unions appropriate quasi rents deriving from long-lived tangible and intangible capital. The connection between unions, investment behavior, and productivity growth emerges as a particularly fruitful line of empirical inquiry, although it does not encourage a sanguine view of unionism's long-run impact.