The Effects of Unionization: A Macroeconomic Approach
Carl, Joseph B.
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The effects of labor unions have long been disputed. Many economists have tried to capture the effects of unions on various variables like wages, firm profit and worker · productivity. While these variables have been repeatedly tested in firm-by-firm microeconomic settings, this paper analyzes how unions affect entire nations and thereby analyzes the macroeconomic impact on productivity and unemployment. Data gathered from the Organization for Economic Cooperation and Development along with data from the International Labor Organization help to assess the impact of unionization on 24 countries throughout the modem world. This paper concludes that while unionization may slightly increase productivity, only literacy and unemployment significantly affect the productivity of a given country. Furthermore, affects of unionization on unemployment seem to follow the Calmfors-Driffill model and lower unemployment can be found in countries of both high and low unionization.