Date of Award

Summer 8-13-2013

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Barry T. Hirsch

Second Advisor

Julie L. Hotchkiss

Third Advisor

Rachana R. Bhatt

Fourth Advisor

Myriam J. Quispe-Agnoli

Abstract

Unions are one of the most important institutions in labor markets, and are capable of affecting workers (wages) and employers (performance). Despite the relevance unions have had worldwide, most of the literature has concentrated on the economic effects of unions in the U.S. and other developed countries, with few studies concentrating on what unions do in developing countries.

Because developing countries have contrasting differences compared to developed countries, in terms of economic development, legal settings and institutions, it is possible that conclusions reached in the broader literature might not be appropriate in the framework of developing countries. This dissertation aims to fill this gap in the literature studying the economic effects of unions on wages and performance in selected developing countries in Latin America: Argentina, Bolivia, Chile, Mexico, Panama and Uruguay.

The first essay focuses on the impact of unions on wages distribution in Bolivia and Chile, using the novel Recentered Influence Function decomposition. Although both countries have considerably different levels of economic development and institutions, the estimations indicate unions have similar effects increasing wages and reducing wage inequality at the top of the distribution. These results are similar to those found replicating the methodology using U.S. data. The results suggest that the common economic and political forces that govern the role of unions as collective bargaining units transcend other contextual differences in these countries.

The second essay analyzes the impact of unions on economic performance of establishments in the manufacturing sector in Argentina, Bolivia, Chile, Mexico, Panama and Uruguay. Using an augmented Cobb Douglas production function, the essay finds that unions have a positive, but small, effect on productivity, with the exception of Argentina. Analyses on alternative measures of performance show that, for most cases, the positive productivity effects barely offset the higher union compensation; that unions show no relationship with sales growth; and that unionized establishments usually reduce investment in capital and R&D. While no single narrative can explain all observed effects across countries, the results provide a step forward to understand the role of unions on economic performance in developing countries.

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