Working Paper: NBER ID: w1164
Authors: Richard B. Freeman
Abstract: This paper examines available industry data on two profitability measures, the price-cost margin and the ratio of quasi-rents to capital, for the purpose of determining the effect of unionism on profits. It finds that unionism reduces profitability and that this effect occurs in highly concentrated industries. The effect of unionism is quite substantial in most calculations, suggesting that the fraction organized in a sector be included in standard Industrial Organization profitability calculations in the future.
Keywords: Unionism; Profitability; Price-Cost Margins; Quasi-Rents; Industrial Organization
JEL Codes: J51; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unionism (J51) | Reduced Profitability (G32) |
| Unionism (J51) | Price-Cost Margin (D40) |
| Unionism (J51) | Quasi-Rents per Unit of Capital (D33) |
| Unionism + High Concentration (J51) | Greater Reduction in Profitability (G32) |