Labour Market Institutions and the future role of Trade Unions

Labour Market Institutions and the future role of Trade Unions

M.F. Bognanno and M. Kleiner, eds., Labour Market Institutions and the Future Role of Trade Unions (Blackwell, Oxford, 1992) pp. 228. lSBN l-55786-342...

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M.F. Bognanno and M. Kleiner, eds., Labour Market Institutions and the Future Role of Trade Unions (Blackwell, Oxford, 1992) pp. 228. lSBN l-55786-342-3, E15.95. This is essentially the proceedings of a conference that took place in 1990 in Minnesota. The papers are largely empirical pieces using US data with just one exception. The authors are academics with the exception of one paper authored by a union official. By and large the papers do not say much that is explicit and concrete about the future role of unions and most of them say relatively little about institutional features of the labour markets. Thus, it is a fairly disparate collection of material fronted by a few pages of summary by the editors and there is no very good reason for wanting them collected together in a single volume. Since this is a high variance collection I imagine that labour economists of all flavours will find something of interest here but very few will find enough of interest to want to buy it. Moreover, the editorial introduction makes no attempt at an overview of the literature, or even much of an attempt to overview the papers included here so I cannot imagine students getting much from this. Thus, the book is likely to have a little appeal to a large number of labour economists and industrial relations experts but few will find the price to be below their reservation price, I suspect. Certainly outside the US I cannot see that this volume will have much appeal. This volume, like many others of its kind, is a bit of a curate’s egg and it is hard to resist the temptation to conclude that this is a rather inefficient way of distributing new research findings. It makes it difficult to find the papers in the first place and, once one has tracked it down, it is made more difficult to read by the very unhelpful practice of collecting the references together at the end of the book. Such volumes are usually implicitly acknowledged not to be coherent collections by virtue of the scant attempt to establish a cohesive style or even to provide an extensive index. This one is no exception ~ indeed it does not even have an index at all. Nevertheless I found a number of the papers very interesting and I found them mostly to be well done. I will concentrate here on what I found of interest but, since others will be interested in other aspects of labour markets I have a few words about all of the papers. First, the editorial introduction. This is a fairly soporific piece but is mercifully short. It simply contains very short and uncritical summaries of the papers and is best avoided altogether. Next comes C. McDonald, an official of the US union pressure group AFL-CIO, who gives an interesting (and non-econometric) account of the fall in unionisation in the US but the paper stumbles after this, rambles for a while and ends with a plea for the support of academics to help protect workers rights from being eroded. I suspect it made a better speech than it does a paper.

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This is followed by R. Marshall, a former Secretary of Labour, who lists a number of strong hypotheses, fails to test any of them, and comes to bold conclusions for policy on the basis of a pretty selective view of other studies. This is not great social science. John Dunlop delivers his message in a few terse pages of doom and gloom ~ although I expect he would have been more optimistic had he known that a Democratic president was just around the corner whose agenda reads very much like Dunlop’s list of current US ailments. It is interesting to hear the opinions of a grand-old-man of the profession but I was disappointed that, in this particular piece at least, there was no considered analysis of the issues that he raised. Blachflower and Freeman is the first substantive paper of the kind one might expect to see in a serious journal. They present the aggregate stylized facts for a number of countries and then tabulate membership using broadly comparable micro data from the International Social Survey Programme (ISSP). ISSP is an underused and invaluable resource for cross country comparisons in this and a number of other areas. I suspect we will see much more of this data. They then use simple econometric models to estimate wage effects and survey the literature on other effects. The US wage effect is shown to be around twice as large as that in the other countries studied and the authors argue that it is this that lies behind the rapid fall in US unionisation. This is pretty good social science. Jonathan Leonard looks at employment growth differences across union and non-union plants in a panel of Californian plants and found that the growth in non-union plants was greater than in union plants - after controlling for other variables in simple regressions he found that the annual growth rate was 2 to 4% lower in union plants and this difference would account for the majority of the actual recorded fall over the time period of the data. The paper hangs together pretty well and is well worth reading for those interested in understanding the dynamics of employment. Barry Hirsch is, for me, the most interesting paper in the volume. It is largely concerned with the impact of unions on the investment behaviour of firms. There is a thoughtful discussion of theoretical issues followed by an econometric analysis of the data in the NBER’s R&D Masterfile which is a long panel of manufacturing firms and he finds that unions have a devastating negative impact on R&D investment. This is good social science. Joseph Reid is a well organised and readable account of the changes in and the prospects for US unions. He argues what unions need to do to survive quite well, but there is little analysis of the incentive mechanism required to ensure that such policies are followed. It is pretty speculative in places but in a way that is provocative rather than superficial. Jacoby and Verma are concerned with ILUs (independent local unions which are usually single plant non-affiliated organisations). They document their

growth and subsequent stagnation and consider in detail a case study of a single firm, with a large number of plants, where many plants have ILUs. They find that there is no difference between wages at ILU and at conventionally unionized plants but both paid higher wages than the non-union plants. The authors argue, quite convincingly, that ILUs are worthy of further research. Addison and Portugal, motivated by US legislation requiring mandatory advance notification of collective dismissals, looks at the impact of advance notice of dismissal on unemployment duration of displaced workers. They find that advance notice leads to lower duration although the effect for women was not significant. This is a well executed paper. Pensions are an important institutional feature of the labour market and Pesando, Gunderson and Shum describe the features of the Canadian flat benefit schemes (where retirement income is determined simply by length of service) which are common in the union sector (as opposed to the non-union sector where pension income is related to pre-retirement earnings). This is a careful paper that goes into the detail ofwhat the schemes are and argues what effects that the schemes might have ~ but it cries out for some good data to model these effects. The final paper, by Orazem, Mattila and Weikum, is concerned with the use of factor-point counts to determine wages where the characteristics of jobs are given points and pay is determined by the total points attached to a job. This is clearly related to the use of comparable worth to determine the pay of jobs for women. The paper uses data on 78 jobs in 14 states and finds that pay in states which use factor point determined pay methods are sensitive to market determined wage rates.

SSDf 0927.5371(93)E0023-L

Ian Walker Keele University Keele United Kingdom

David Marsden, ed., Pay and Employment in the New Europe, (Edward Aldershot, 1992) pp. 272, ISBN 1-85278564-D, &39. 95.


A European Monetary Union means that a permanent fixed exchange rate is established between the countries within the union. The prospective economic (and political) advantages that countries may gain by this will at least, in the short run, be balanced by disadvantages in form of greater or lesser adjustment costs connected with the integration. Such adjustment costs will arise, in particular, in organizing a well-functioning wage determination system within a monetary union. There are significant differences across European