Working Paper: NBER ID: w1139
Authors: Steven G. Allen
Abstract: This paper examines the difference in productivity between union and nonunion contractors in the construction industry over a sample of 83 commercial office buildings and another sample of 68 elementary and secondary schools. The popular belief that the building trades unions reduce productivity in the industry is soundly rejected in both samples. Square footage per man hour is 38 percent higher in office buildings built predominantly by union labor, controlling for differences in capital-labor ratios, observable labor quality, region, and building characteristics. Estimates of the union-nonunion productivity difference in the school sample range from zero (when output is measured in physical units) to 20 percent greater for union contractors (when output is measured as value added deflatedby regional price differences), controlling for the same factors. Possible sources of higher union productivity in the office building sample are explored. A lower ratio of supervision to production worker hours and use of technologies and materials that economize on labor account for as much as 25 percent of the higher productivity observed in the union sample. The remainder is probably attributable to apprenticeship training, unobserved labor quality, economies of recruiting and screening, and improved manangement.
Keywords: Unionization; Productivity; Construction; Labor Economics
JEL Codes: J51; L74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher productivity in union projects (J58) | Higher productivity in nonunion projects (J50) |
| Square footage per man-hour is 38% higher in office buildings built predominantly by union labor (J50) | Higher productivity in union projects (J58) |
| Lower ratio of supervision to production worker hours (L23) | Higher productivity in union projects (J58) |
| Use of technologies that economize on labor (O14) | Higher productivity in union projects (J58) |
| Apprenticeship training (J24) | Higher productivity in union projects (J58) |
| Unobserved labor quality (J24) | Higher productivity in union projects (J58) |
| Economies of recruiting and screening (J24) | Higher productivity in union projects (J58) |
| Improved management practices (Q15) | Higher productivity in union projects (J58) |
| Unionization (J51) | Higher productivity in construction (L74) |