The Effect of Unions on Productivity in the Public Sector: The Case of Municipal Libraries

[Excerpt] This paper represents our initial efforts at analyzing the effects of unions on productivity in the public sector. We first sketch an analytical framework that can be used to estimate these effects, focusing for expository purposes on municipal public libraries. We initially focus on libraries because considerable effort has been devoted to conceptualizing productivity measures for them and because of the availability of data to implement the framework. After discussing the analytical framework, we present preliminary estimtes of the effects of unions on productivity in public libraries based upon analyses of data from 71 municipal libraries in Massachusetts. We conclude by indicating how these analyses will be extended and the direction that we hope our future research will take

Compensating Wage Differentials for Mandatory Overtime

Our paper estimates the extent to which employees are compensated for an unfavorable job characteristic, being required to accept mandatory assignment of overtime, by receiving higher straight-time wages. Our estimating equations are derived from a model in which wage rates and the existence of mandatory assignment of overtime are jointly determined in the market by the interaction of employee and employer preferences. While - on average, we do not observe the existence of a compensating wage differential for mandatory overtime, we do observe the existence of such differentials for unionized workers and workers with only a few years experience at a firm. Given any estimated compensating wage differential for an unfavorable working condition, one must decide whether its magnitude is sufficiently large to allow one to conclude that the differential fully compensates workers for the disutility of being subject to the unfavorable working condition. We develop and illustrate a methodology that can be used to answer this question, at least for the case of mandatory overtime provisions and other rules that restrict employees' choice of hours.

Why do small establishments hire fewer blacks than large ones

This paper shows that small establishments are much less likely to hire and employ blacks than are larger establishments. A number of possible explanations for this result are considered, such as differences across establishments in application rates from blacks, skill needs, locations, and recruiting behavior. Although these factors can account for some of the differences between small and large employers, much remains unexplained. The results suggest that discrimination in hiring may be much more pervasive at smaller establishments than larger ones.

The Effect of Unions on Productivity in the Public Sector: The Case of Libraries

This paper presents an analytical framework that can be used to analyze the effects of unions on productivity in the public sector. Our initial focus is on public libraries because considerable effort has been devoted to conceptualizing library productivity measures and because of the availability of data to implement the framework. Preliminary estimates are presented based upon data from 71 municipal libraries in Massachusetts. We conclude by indicating the direction that our future research on the subject will take.

ILR Impact Brief - It’s a Paradox: Union Workers Less Satisfied but Less Likely to Quit

[Excerpt] Existing economic models of human behavior do not adequately deal with the seeming inconsistency between union members’ attitudes about their jobs and their subsequent actions. A more promising explanation might derive from job satisfaction theory, which suggests that union members have a particular set of values, expectations, and frames of reference that they use to evaluate the outcomes of their work effort. Individuals who join unions may place higher value on wages and benefits, which are the focus of most collectively- bargained contracts, than do non-union workers; historically, unions have delivered in this regard. Unionized workers may be more dissatisfied because of a more adversarial climate (e.g., testy supervisory and interpersonal relations, narrowly-defined jobs) but are less likely to quit because the things they value most—good wages and benefits—are provided

Return to Training and Establishment Size: A Reexamination of the Size-Wage Puzzle

The paper reexamines the employer size-wage puzzle using NLSY79 data. The empirical results show that even for those who never receive any training from their employers, size-wage premium still exists and is quantitatively important. Wage increases associated with receiving on-the-job training are less in large establishments than in small ones. In addition, there is no evidence that starting wages in large establishments are lower than in small establishments. Theories that explain the size-wage puzzle using training and other endogenous productivity differences are not consistent with these new findings.size-wage premium, return to training, establishment size

Productivity Grows, But Workers Don’t Share

[Excerpt] Productivity growth increased substantially in the 1990s. For each hour that a worker spends on the job, more is being produced. The higher productivity has lowered costs and boosted company revenues, but workers have not shared in the gains. Higher productivity means that workers should be experiencing a faster rise in real wages than in past decades. When productivity grows, employers, in general, have the ability to grant wage increases above the rate of inflation, and realize higher profits at the same time. But productivity growth in recent decades has not led to higher wages as it should. Instead, the buying power of workers has declined as employers continue to make every effort to hold down wages. In contrast to the situation of workers, profits and executive salaries are increasing at a startling rate. The benefits of rising productivity have been captured by the richest Americans, who have allowed nothing to trickle down to the rest

Job Creation, Worker Churning, and Wages at Young Businesses

Prior research has established the important role of startups and fast-growing young businesses in job creation and employment growth in the U.S. economy (Haltiwanger, Jarmin, and Miranda, (2010)). New firms and young businesses account for about 70 percent of gross job creation and disproportionately contribute to net job creation. The experimentation and dynamism of startups and young businesses also contribute to productivity growth (see, e.g., Haltiwanger (2012)). While the contribution to job creation and productivity is increasingly well understood, relatively little is known about the characteristics of the jobs generated by startups and young businesses. We use newly released data from the QWI using the firm size and firm age measures developed from the Business Dynamics Statistics (BDS) to shed light on characteristics of jobs at young businesses. We focus on three key characteristics of jobs -- job creation, the churning of workers, and earnings per worker

Compensating Wage Differentials for Mandatory Overtime

Our paper estimates the extent to which employees are compensated for an unfavorable job characteristic, being required to accept mandatory assignment of overtime, by receiving higher straight—time wages. Our estimating equations are derived from a model in which wage rates and the existence of mandatory assignment of overtime are jointly determined in the market by the interaction of employee and employer preferences. While on average, we do not observe the existence of a compensating wage differential for mandatory overtime, we do observe the existence of such differentials for unionized workers and workers with only a few years experience at a firm. Given any estimated compensating wage differential for an unfavorable working condition, one must decide whether its magnitude is sufficiently large to allow one to conclude that the differential fully compensates workers for the disutility of being subject to the unfavorable working condition. We develop and illustrate a methodology that can be used to answer this question, at least for the case of mandatory overtime provisions and other rules that restrict employees\u27 choice of hours

Compensation and Firm Performance

This paper uses stochastic simulation and my U.S. econometric model to examine the optimal choice of monetary policy instruments. Are the variances, covariances, and parameters in the model such as to favor one instrument over the other, in particular the interest rate over the money supply? The results show that the interest rate and the money supply are about equally good as policy instruments in terms of minimizing the variance of real GNP. The variances of some of the components of GNP are, however, much larger when the money supply is the policy instrument, as is the variance of the change in stock prices. Therefore, if one's loss function is expanded beyond simply the variance of real GNP to variances of other variables, the interest rate policy does better. The results thus provide some support for what seems to be the Fed's current choice of using the interest rate as its primary instrument. Stochastic simulation is also used to estimate how much of the variance of real GNP is due to the error terms in the demand for money equations. The results show that the contribution is not very great even when the money supply is the policy instrument.