Differences in their economic settings and adaptation to market reforms provide a mixture of settings which suggests a cross-country study may prove valuable to better understand the relationship between unions and productivity. The purpose of this paper is to expand the literature by analyzing the impact of unions on productivity for six countries in Latin America, namely Argentina, Bolivia, Chile, Mexico, Panama, and Uruguay. 2 Because businesses in developing economies face different types of obstacles, such as restrictions on access to capital, unfavorable institutions, high levels of corruption, less competitive markets, and unstable business environments, compared to those in developed countries, it is not clear how unions affect productivity.
To some extent, the uncertainty surrounding these issues reflects problems with data limitations, as well as the underlying heterogeneity in union effects across establishments, industries, and countries.Īlthough there is a reasonably large literature for several developed economies, there is little evidence regarding “what unions do” for establishment productivity in developing economies. While most of the literature agrees that unions have mostly negative effects on profitability and investment, there is little consensus on the effects that unions have on productivity ( Kuhn 1998 Doucouliagos and Laroche 2003, 2009 Aidt and Tzannatos 2002 Hirsch 2004). One of the most contentious debates in the literature on unions has been on how unions affect a firm’s performance.
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