Unionization, Management Adjustment and Productivity

The effect of unionization on productivity is examined in this paper using time-series data on selected establishments in the U.S. cement industry. The analysis combines statistical estimation of the union impact and interviews with union and management officials to forge a link between econometric estimation and the traditional institutional analysis of union policy and management adjustment. The econometric analysis primarily deals with the problem of identifying the impact of the union in the face of firm specific effects and adjustments in labor quality. The case studies are designed to shed light on the question of how unionization affects productivity. The empirical results support the conclusion that unionization leads to productive changes in the operation of the enterprise. Evidence from the case studies suggests that much of the gain in productivity derives from a series of extensive changes in management personnel and procedure. These adjustments are a management response to changes in the employment contract which follow unionization.

How Elastic is The Demand for Labor?

This paper investigates the magnitude of the elasticity of demand for labor in time series data using more general and complete models of demand than have been previously employed. It argues that previous analyses have imposed two invalid constraints in calculations, which bias downward estimated elasticities. The first invalid constraint is the assumption that real capital prices have an equal opposite effect to real wages in the demand equation. We show on measurement error grounds that this constraint should not be imposed in econometric work even when long run homogeneity of prices correctly characterizes the market. The constraint is rejected in the data. The second invalid constraint is that all explanatory variables have the same lag distribution. We argue that this constraint is invalid when decisions are made under uncertainty and find that it is also rejected by the data. The principal positive empirical finding is that with the constraints relaxed, the elasticity, of demand with respect to real wages is much larger than the estimates in the literature, indicating much greater price responsiveness on the demand side of the labor market than has previously been thought.

Productivity Growth and R&D at the Business Level: Results From the PIMS Data Base

This paper presents the results of a study of productivity growth and R&D in the 1970s using data on narrowly defined 'business units within a firm. Estimates are developed under different assumptions about technology ,industry effects, and changes in the return to R&D over time. The R&D data are broken down into process and product expenditures, and some information is available on past success in developing proprietary technology, andontheincidenceofma3or changes in technology in the recent past. The results suggest a significant relationship between R&D and the growth of productivity; in versions using total factor productivity as the dependent variable, the estimated rate of return to R&D investment is about 20 percent. We find some evidence that R&D has its biggest effect on productivity in those markets where major changes in technology have occurred in the recent past. Previous success in developing proprietary process technology affects total factor productivity directly, but appears to have little effect on estimated returns to R&D. The notion that the productivity of R&D declined in the l970sfinds Little support in this data. Irrespective of model specification, trends in the R&D coefficient are substantively arid statistically insignificant. Our calculations suggest that reduced investment in R&D may have accounted for at least 10 percent of the decline in total factor productivity growth in the l970s.

Labor Force Participation: Timing and Persistence

This paper examines the relative importance of timing and persistence elements in explaining cyclical fluctuations in labor supply. Data from the natural experiment provided by World War I1 and cross-sectional data on American local labor markets, as well as aggregate time-series data are used in the empirical work. We find little evidence that timing effects play an important role in labor market dynamics. The evidence suggests that views emphasizing persistence are more accurate, and that previous employment tends to raise the probability of subsequent employment.

Labor Market Dynamics and Unemployemnt: A Reconsideration

macroeconomics, unemployment

The Dynamics of Youth Unemployment

This paper analyzes the dynamics of youth unemployment. Three broad conclusions emerge. First, the problem of youth joblessness extends beyond the unemployed. We find that over one-half of youth unemployment spells end in labor force withdrawal. Much of youth non-employment is not picked up in the official unemployment statistics, because many young people give up the search for work and leave the labor force. Second, a large part of youth unemployment is accounted for by a relatively small, hard core group of young people who experience long spells of unemployment. While most unemployment spells are short, this is due to the high rates of labor force withdrawal, rather than to job finding. Among male teenagers out of school, for example, we find that over half of unemployment was due to those with more than six months of unemployment in the year. Third, a shortage of attractive jobs is the principle source of long term non-employment. While instability and frequent turnover are major factors in determining the overall pattern of teenage unemployment, we find that the lack of desirable employment opportunities is the crux of the problem for those most seriously affected by youth unemployment.

Demographic Differences in Cyclical Employment Variation

Demographic differences in patterns of employment variation over the business cycle are examined in this paper. Three primary conclusions emerge. First, both participation and unemployment must be considered in any analysis of cyclical changes in the labor market. Second, young people bear a disproportionate share of cyclical employment variation. Third, failure to consider participation has led to undue pessimism about the effect of aggregate demand policy on high unemployment groups. If participation did not surge, reduction in overall unemployment to its 1969 level would reduce the unemployment of almost all demographic groups to very low levels.

Product Development in the World Auto Industry

macroeconomics, auto industry, management efficiency, productivity