Union effects on product and technological innovations
Peer reviewed, Journal article
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Original versionResearch in Labor Economics. 2021, 49 41-65. 10.1108/S0147-912120210000049002
We present theoretical and empirical evidence challenging early studies that found unions were detrimental to workplace innovation. Under our theoretical model, unions prefer product innovation to labor-saving technological process innovation, thus making union wage bargaining regimes more conducive to product innovation than competitive pay setting. We test the theory with population-representative workplace data for Britain and Norway. We find strong support for the notion that local bargaining leads to product innovation, either alone or together with technological innovation.