Trade Unions and Financial Performance

This paper investigates the relationship between trade unions and financial performance using British establishment-level data. We estimate the average overall impact of manual union recognition in 1990 to be roughly half what it was in 1984. We report results suggesting that in 1990 unionized establishments have lower financial performance only where there are closed shop arrangements and the establishments have some product market power and that this effect is greater where managerial freedom to allocate tasks is limited by union work rules. This latter combination occurs in only about one in ten of the unionized workplaces in our sample.