THE EFFECTS OF UNIONS ON FIRM BEHAVIOR - AN EMPIRICAL-ANALYSIS USING FIRM-LEVEL DATA

We evaluate the use of firm-level union coverage rates in empirical mo dels of firm behavior and performance. We focus on the potential for m easurement error in both firm- and industry-level data, and find that firm-level union coverage rates provide more precise estimates of unio n effects. Higher union coverage at a firm is associated with slower e mployment and sales growth, decreased productivity in nonmanufacturing firms, increased productivity in manufacturing firms, lower profitabi lity, and less investment in durable assets, such as research and deve lopment.