Working Paper: NBER ID: w9524
Authors: Alan B. Krueger; Alexandre Mas
Abstract: This paper provides a case study of the effect of labor relations on product quality. We consider whether a long, contentious strike and the hiring of permanent replacement workers by Bridgestone/Firestone in the mid-1990s contributed to the production of an excess number of defective tires. Using several independent data sources we find that labor strife in the Decatur plant closely coincided with lower product quality. Count data regression models based on two data sets of tire failures by plant, year and age show significantly higher failure rates for tires produced in Decatur during the labor dispute than before or after the dispute, or than at other plants. Also, an analysis of internal Firestone engineering tests indicates that P235 tires from Decatur performed less well if they were manufactured during the labor dispute compared with those produced after the dispute, or compared with those from other, non-striking plants. Monthly data suggest that the production of defective tires was particularly high around the time wage concessions were demanded by Firestone in early 1994 and when large numbers of replacement workers and permanent workers worked side by side in late 1995 and early 1996.
Keywords: labor relations; product quality; tire defects; Bridgestone; Firestone
JEL Codes: J5; M1; M5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| labor strife (J52) | worker fatigue (J28) |
| labor strife (J52) | discord among workers (J52) |
| labor strife (J52) | tire defects (L15) |
| labor strife (J52) | increase in defective tire production (L62) |
| labor strife (J52) | poorer performance of tires (L15) |
| timing of defect production (L15) | labor conflict (J52) |