Abstract: A growing body of work--both theoretical and empirical--has
emphasized that unionization may be better understood as a tax on
capital rather than a tax on labor. Under this "new" view,
unionization unambiguously lowers investment. Using data on union
certification elections, we estimate the impact of unionization on
firms' investment behavior. Employing both a standard q-model and an
"investment surprises" technique, we find that union certification
significantly reduces investment. We find that a winning
certification election has, on average, about the same effect on
investment as would a 30 percentage point increase in the corporate
tax.
Keywords: Investment, union
Full paper (145 KB PDF)
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