Working Paper: NBER ID: w14709
Authors: David Lee; Alexandre Mas
Abstract: We estimate the effect of new unionization on firms' equity value over the 1961-1999 period using a newly assembled sample of National Labor Relations Board (NLRB) representation elections matched to stock market data. Event-study estimates show an average union effect on the equity value of the firm equivalent to a cost of at least $40,500 per unionized worker. At the same time, point estimates from a regression-discontinuity design -- comparing the stock market impact of close union election wins to close losses -- are considerably smaller and close to zero. We find a negative relationship between the cumulative abnormal returns and the vote share in support of the union, allowing us to reconcile these seemingly contradictory findings. Using the magnitudes from the analysis, we calibrate a structural "median voter" model of endogenous union determination in order to conduct counterfactual policy simulations of policies that would marginally increase the ease of unionization.
Keywords: unions; equity value; labor relations; event study; regression discontinuity
JEL Codes: J01; J08; J5; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unionization (J50) | firms' equity value (G32) |
| vote share in support of the union (J51) | cumulative abnormal returns (C29) |
| unionization (J50) | firm profitability (L21) |
| union certification (J50) | firms' equity value (G32) |