Working Paper: NBER ID: w19556
Authors: Jeremy Greenwood; David Weiss
Abstract: James A. Schmitz (2005) documents, in a well-known case study, a dramatic rise in productivity in the U.S. and Canadian iron-ore industry following an increase in competition from Brazil. Prior to the increased competition, the industry was not competitive. Surplus in profits was divided between business and unions. Schmitz attributes the increase in productivity to a change in work practices in the industry, as old negotiated union work rules were abandoned or modified. This research formalizes a mechanism through which a rise in competition can lead to increased productivity in the iron-ore industry.
Keywords: competition; productivity; iron ore; unions
JEL Codes: E13; J51; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased competition (L13) | productivity gains (O49) |
| increased competition (L13) | reduced overstaffing (J63) |
| reduced overstaffing (J63) | increased effort from workers (J29) |
| increased effort from workers (J29) | productivity gains (O49) |
| increased competition (L13) | modification of workplace rules (J29) |
| modification of workplace rules (J29) | productivity gains (O49) |
| increased competition (L13) | reduced union membership (J58) |