Union Mediation and Adaptation to Reciprocal Loyalty Arrangements

Panos, Georgios and Theodossiou, Ioannis (2009): Union Mediation and Adaptation to Reciprocal Loyalty Arrangements.

Abstract

This study evaluates behavioural differences between union and non-union workers in their preferences regarding reciprocal loyalty in the employment relationship. It uses a vignettes approach to elicit preferences and a novel dataset with unusually rich information on semi-skilled employees from four European countries. It focuses on reciprocal employer-employee arrangements stating that if the employee exerts higher effort, the employer reciprocates by offering higher job security. Such reciprocal arrangements are found to be valued more highly by unionized workers. The evidence suggests that the norm-enhancing role of union membership is the key candidate explanation of this pattern. Union workers are also found more likely to exercise the ‘voice’ rather than the ‘exit’ option in their current job.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade Union, Loyalty, Reciprocity, Adaptation, Conjoint Analysis, Exit, Voice
• Subjects: J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J51 - Trade Unions: Objectives, Structure, and Effects; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J28 - Safety ; Job Satisfaction ; Related Public Policy; J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J52 - Dispute Resolution: Strikes, Arbitration, and Mediation ; Collective Bargaining

References

Akerlof, George A. 1983. "Loyalty Filters." The American Economic Review 73(1): 54-63.

Akerlof, George A. 1982. "Labor Contracts as Partial Gift Exchange." The Quarterly Journal of Economics 97(4): 543-69.

Akerlof, George A. 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence." Quarterly Journal of Economics 94(4): 749-75.

Akerlof, George A. and William T. Dickens, 1982. "The Economic Consequences of Cognitive Dissonance". American Economic Review 72(3): 307-19.

Akerlof, George A. and Rachel E. Kranton. 2000. "Economics and Identity." Quarterly Journal of Economics 115(3): 715-53.

Ariely, Dan, George Loewenstein and Drazen Prelec. 2006. "Tom Sawyer and the Construction of Value." Journal of Economic Behavior & Organisation 60: 1-10.

Ariely, Dan, George Loewenstein and Drazen Prelec. 2003. ""Coherent Arbitrariness": Stable Demand Curves without Stable Preferences." The Quarterly Journal of Economics 118(1): 73-105.

Bartel, Ann, Richard B. Freeman, Casey Ichniowski and Morris Kleiner. 2003. "Can a Work Organization have an Attitude Problem? the Impact of Workplaces on Employee Attitudes and Economic Outcomes." NBER Working Paper No. w9987

Ben-Ner, Avner and Louis Putterman. 2000. "On some Implications of Evolutionary Psychology for the Study of Preferences and Institutions." Journal of Economic Behavior & Organization 43(1): 91-9.

Blundell, Richard and Monica Costa Dias. 2000. "Evaluation Methods for Non-Experimental Data." Fiscal Studies 21(4): 427-68.

Booth, Alison, L. 1985. "The Free Rider Problem and a Social Custom Model of Trade Union Membership." The Quarterly Journal of Economics 100(1): 253-61.

Borjas, George, G. 1979. "Job Satisfaction, Wages and Unions." The Journal of Human Resources 14(1): 21-40.

Boroff, Karen E. and David Lewin. 1997. "Loyalty, Voice, and Intent to Exit a Union Firm: A Conceptual and Empirical Analysis." Industrial and Labor Relations Review 51(1): 50-63.

Bowles, Samuel. 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions." Journal of Economic Literature 36(1): 75-111.

Cahuc, Pierre and Francis Kramarz. 1997. "Voice and Loyalty as a Delegation of Authority: A Model and a Test on Matched Worker-Firm Panels." Journal of Labor Economics 15(4): 658-88.

Cappelli, Peter and Nikolai Rogovsky. 1998. "Employee Involvement and Organizational Citizenship: Implications for Labor Law Reform and "Lean Production"." Industrial and Labor Relations Review 51(4): 633-53.

Carpenter, Jeffrey P. 2005. "Endogenous Social Preferences." Review of Radical Political Economics 37(1): 63-84.

Cosmides, Leda and John Tooby. 1992. "Cognitive Adaptations for Social Exchange". In The Adapted Mind: Evolutionary Psychology and the Generation of Culture. Ed: Jeremy Burrow H., Leda Cosmides and John Tooby. 163-228. New York. Oxford University Press.

Dehejia, Rajeev H. and Sadek Wahba. 2002. "Propensity Score-Matching Methods for Nonexperimental Causal Studies." The Review of Economics and Statistics 84(1): 151-61.

Doeringer, Peter B. 1986. "Internal Labor Markets and Noncompeting Groups." The American Economic Review 76(2), Papers and Proceedings of the Ninety-Eighth Annual Meeting of the American Economic Association): 48-52.

Doeringer, Peter B. 1984. "Internal Labor Markets and Paternalism in Rural Areas". In Internal Labor Markets. Ed: Paul Osterman. Cambridge, MA. MIT Press.

Duncan, Greg J. and Frank P. Stafford. 1980. "Do Union Members Receive Compensating Wage Differentials?" American Economic Review 70(3): 355-71.

Dunlop, John T. 1944. Wage Determination Under Trade Unions. Macmillan. New York, NY.

EPICURUS Project. 2005. Individual Stated Job Preferences; A Conjoint Analysis Approach: Report for the Workpackage NOVEL. Report to the European Commission

EPICURUS Project. 2004. The EPICURUS Database: Final Report for the Workpackage QUESTION. Report to the European Commission

Farber, Henry S. and Daniel H. Saks. 1980. "Why Workers Want Unions: The Role of Relative Wages and Job Characteristics." Journal of Political Economy 88(2): 349-69.

Fehr, Ernst and Simon Gächter. 2000. "Fairness and Retaliation: The Economics of Reciprocity." Journal of Economic Perspectives 14(3): 159-81.

Fehr, Ernst and Simon Gächter. 1998. "Reciprocity and Economics: The Economic Implications of Homo Reciprocans." European Economic Review 42(3-5): 845-59.

Fehr, Ernst, Simon Gächter and Georg Kirchsteiger. 1997. "Reciprocity as a Contract Enforcement Device: Experimental Evidence." Econometrica 65(4): 833-60.

Ferrer-i-Carbonell, Ada and Paul Frijters. 2004. "How Important is Methodology for the Estimates of the Determinants of Happiness?" Economic Journal 114(497): 641-59.

Ferrer-i-Carbonell, Ada, van Praag, Bernard M. S. and Ioannis Theodossiou. 2007. "Image and Reality: The Case of Job Satisfaction." CELMR Working Paper.

Festinger, Leon. 1957. A Theory of Cognitive Dissonance. Stanford University Press. Stanford: CA.

Freeman, R. B. 1976. "Individual Mobility and Union Voice in the Labor Market." The American Economic Review 66(2), Papers and Proceedings of the Eighty-eighth Annual Meeting of the American Economic Association: 361-8.

Freeman, Richard B. 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations." The Quarterly Journal of Economics 94(4): 643-73.

Freeman, Richard B. and James L. Medoff. 1984. What do Unions do? Basic Books, Inc. New York, NY.

Fuller, Jerry B. J. and Kim Hester. 2001. "A Closer Look at the Relationship between Justice Perceptions and Union Participation." Journal of Applied Psychology 86(6): 1096-105.

Goette, Lorenz, David Huffman and Stephan Meier. 2006. "The Impact of Group Membership on Cooperation and Norm Enforcement: Evidence using Random Assignment to Real Social Groups." American Economic Review 96(2): 212-6.

Hanemann, W. M. 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses." American Journal of Agricultural Economics 66(3): 332-41.

Harter, James K., Frank L. Schmidt and Theodore L. Hayes. 2002. "Business-Unit-Level Relationship between Employee Satisfaction, Employee Engagement, and Business Outcomes: A Meta-Analysis." Journal of Applied Psychology 87(2): 268-79.

Heckman, James J. 1979. "Sample Selection Bias as a Specification Error." Econometrica 47(1): 153-61.

Heckman, James J. 1978. "Dummy Endogenous Variables in a Simultaneous Equation System." Econometrica 46(4): 931-59.

Hersch, Joni and Joe Stone A. 1990. "Is Union Job Dissatisfaction Real?" The Journal of Human Resources 25(4): 736-51.

Hirschman, Albert O. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Harvard University Press. Cambridge, MA.

Hirschman, Albert O. 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, Or Feeble?" Journal of Economic Literature 20(4): 1463-84.

Katz, Harry C., Thomas A. Kochan and Kenneth R. Gobeille. 1983. "Industrial Relations Performance, Economic Performance, and QWL Programs: An Interplant Analysis." Industrial and Labor Relations Review 37(1): 3-17.

Kleiner, Morris, M., Jonathan S. Leonard and Adam M. Pilarski. 2002. "How Industrial Relations Affects Plant Performance: The Case of Commercial Aircraft Manufacturing." Industrial and Labor Relations Review 55(2): 195-218.

Kochan, Thomas A. and David E. Helfman. 1981. "The Effects of Collective Bargaining on Economic and Behavioral Job Outcomes". In Research in Labor Economics. Ed: Ronald G. Ehrenberg. 321-65. Greenwich, Conn. JAI Press.

Krueger, Alan B. and Alexandre Mas. 2004. "Strikes, Scabs, and Tread Separations: Labor Strife and the Production of Defective Bridgestone/Firestone Tires." Journal of Political Economy 112(2): 253-89.

Lancaster, Kelvin J. 1971. Consumer Demand: A New Approach. Columbia University Press. New York, NY;.

Lancaster, Kelvin J. 1966. "A New Approach to Consumer Theory." The Journal of Political Economy 74(2): 132-57.

Lee, Lung-Fei. 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables." International Economic Review 19(2): 415-33.

Lewin, David. 2005. "Unionism and Employment Conflict Resolution: Rethinking Collective Voice and its Consequences." Journal of Marketing Research 26(2): 209-39. Lindeboom, Maarten and Eddy van Doorslaer. 2004. "Cut-Point Shifts and Index Shifts in Self-Reported Health." Journal of Health Economics 23: 1083-99.

Louviere, Jordan, J., David A. Hensher and Joffre D. Swait. 2000. Stated Choice Methods: Analysis and Applications. Cambridge University Press. Cambridge: UK. Maddala, Gangadharrao S. 1983. Limited-Dependent and Qualitative Variables in Econometrics. Cambridge University Press. New York: NY.

Mas, Alexandre. 2008. "Labour Unrest and the Quality of Production: Evidence from the Construction Equipment Resale Market." The Review of Economic Studies 75(1): 229.

McFadden, Danniel. 1973. "Conditional Logit Analysis of Quantitative Choice Behavior". In Frontiers in Econometrics. Ed: P. Zarambka. New York, NY. Acedemic Press.

Milgrom, Paul and John Roberts. 1992. Economics, Organization and Management.

Ostrom, Elinor. 1998. "A Behavioral Approach to the Rational Choice Theory of Collective Action: Presidential Address, American Political Science Association, 1997." The American Political Science Review 92(1): 1-22.

Pouliakas, Konstantinos and Ioannis Theodossiou. 2008. "Measuring the Utility Cost of Temporary Employment Contracts using a Conjoint Analysis Approach." Economica forthcoming

Rosen, Sherwin. 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition." Journal of Political Economy 82(1): 34.

Rusbult, Caryl E., Dan Farrell, Glen Rogers and Arch G. Mainous III. 1988. "Impact of Exchange Variables on Exit, Voice, Loyalty, and Neglect: An Integrative Model of Responses to Declining Job Satisfaction." The Academy of Management Journal 31(3): 599-627.

Simon, Herbert A. 1951. "A Formal Theory of the Employment Relationship." Econometrica 19(3): 293-305.

Stewart, Mark B. 1983. "On Least Squares Estimation when the Dependent Variable is Grouped." The Review of Economic Studies 50(4): 737-53.

van Beek, Krijn W. H., Carl C. Koopmans and Bernard M. S. van Praag. 1997. "Shopping at the Labour Market: A Real Tale of Fiction." European Economic Review 41(2): 295-317. van Praag, Bernard M. S. and Ada Ferrer-i-Carbonell. 2004. Happiness Quantified. Oxford University Press.

van Soest, Arthur, Liam Delaney, Colm Harmon, Arie Kapteyn and James P. Smith. 2007. "Validating the use of Vignettes for Subjective Threshold Scales." IZA Discussion Paper No. 2860