TRADE-UNIONS AND FINANCIAL PERFORMANCE

This paper investigates the relationship between trade unions and fina ncial performance using British establishment-level data. We estimate the average overall impact of manual union recognition in 1990 to be r oughly half what it was in 1984. We report results suggesting that in 1990 unionized establishments have lower financial performance only wh ere there are closed shop arrangements and the establishments have som e product market power and that this effect is greater where manageria l freedom to allocate tasks is limited by union work rules. This latte r combination occurs in only about one in ten of the unionized workpla ces in our sample.