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The Economic Effects of Unions in Latin America: Their Impact on Wages and the Economic Performance of Firms in Uruguay

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  • Cassoni, Adriana
  • Labadie, Gastón J.
  • Fachola, Gabriela

Abstract

This study examines the impact of unionization and the level of centralization in bargaining, at the level of the industry or the firm, on wages and on the economic performance of firms within the manufacturing sector in Uruguay, using a panel of establishments for the period 1988 to 1995. The main findings suggest that unionization increases wages and employment and promotes investment due to firms substituting labor by capital. Unions tend to organize in those plants with highest rates of profits, but promote increases in productivity and prevent profitability increases. Given the negative effect of unionization at the industry level on the rate of growth of profitability of firms, results also suggest that unions tended to organize and to be stronger in those sectors in which extra rents were higher due to monopoly power.

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  • Cassoni, Adriana & Labadie, Gastón J. & Fachola, Gabriela, 2002. "The Economic Effects of Unions in Latin America: Their Impact on Wages and the Economic Performance of Firms in Uruguay," IDB Publications (Working Papers) 3283, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:3283
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    Cited by:

    1. Carlos Lamarche, 2015. "Collective bargaining in developing countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 183-183, September.
    2. Carlos Casacuberta & Gabriela Fachola & Nestor Gandelman, 2004. "The Impact of Trade Liberalization on Employment, Capital, and Productivity Dynamics: Evidence from the Uruguayan Manufacturing Sector," Research Department Publications 3170, Inter-American Development Bank, Research Department.
    3. Juli?n Messina & Anna Sanz-de-Galdeano, 2014. "Wage Rigidity and Disinflation in Emerging Countries," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(1), pages 102-133, January.
    4. Arias, Omar & Blom, Andreas & Bosch, Mariano & Cunningham, Wendy & Fiszbein, Ariel & Lopez Acevedo, Gladys & Maloney, William & Saavedra, Jaime & Sanchez-Paramo, Carolina & Santamaria, Mauricio & Siga, 2005. "Pending issues in protection, productivity growth, and poverty reduction," Policy Research Working Paper Series 3799, The World Bank.
    5. Mari Kangasniemi & Jukka Pirttilä, 2013. "Trade unions in the south and co-operation between unions in the South and in the North: A survey of the economics literature," Working Papers 285, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    6. repec:ilo:ilowps:433276 is not listed on IDEAS
    7. Carlos Casacuberta & Dayna Zaclicever, 2015. "The Effect of Trade Protection on Productivity in Uruguay," Documentos de Trabajo (working papers) 0215, Department of Economics - dECON.
    8. Cuesta Laura, 2005. "Impacto de los sindicatos en Colombia: ¿mayores salarios y más desigualdad?," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, September.
    9. Carlos Casacuberta & Néstor Gandelman, 2012. "Protection, Openness, and Factor Adjustment: Evidence from the Manufacturing Sector in Uruguay," Economic Development and Cultural Change, University of Chicago Press, vol. 60(3), pages 597-629.
    10. Adriana D. Kugler, 2019. "Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America," IMF Working Papers 2019/155, International Monetary Fund.
    11. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4657-4702, Elsevier.
    12. M. Sylvina Porras-Arena & Mauricio A. Suárez Cal, 2021. "What’s behind Okun’s law? A multiple equation approach to the Uruguayan labour market," Documentos de Trabajo (working papers) 21-30, Instituto de Economía - IECON.
    13. Chacaltana Janampa, Juan., 2009. "Economic implications of labour and labour-related laws on MSEs : a quick review of the Latin American experience," ILO Working Papers 994332763402676, International Labour Organization.
    14. Carlos Casacuberta & Gabriela Fachola & Nestor Gandelman, 2004. "The impact of trade liberalization on employment, capital, and productivity dynamics: evidence from the uruguayan manufacturing sector," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 7(4), pages 225-248.

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