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.
We thank the Editors of Research in Labor Economics and two anonymous referees, participants at the 2015 Royal Economic Society Conference in Manchester and the 2016 European Association of Labor Economics in Ghent for comments on an earlier draft of this paper. Alex Bryson thanks the sponsors of the Workplace Employment Relations Survey 2011 (Department for Business, Energy and Industrial Strategy, Acas, ESRC, and NIESR) and the UK Data Archive for access to the WERS data.
Bryson, A. and Dale-Olsen, H. (2021), "Union Effects on Product and Technological Innovation", Polachek, S.W., Tatsiramos, K., Russo, G. and van Houten, G. (Ed.) Workplace Productivity and Management Practices (Research in Labor Economics, Vol. 49), Emerald Publishing Limited, Bingley, pp. 41-65. https://doi.org/10.1108/S0147-912120210000049002
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