Stock-price response to profit sharing in unionized settings

Article Abstract:

Prior research shows that stock price responds favorably to managerial incentive schemes which lower costs and stimulate growth. This article analyzes the consequence for shareholders of introducing profit sharing in unionized firms. Positive abnormal returns were associated with the announcement of collective agreements incorporating risk-sharing components, especially when the firm was experiencing preexisting financial distress. The realized gains generally exceeded that which could be attributed to strike activity or negotiated wage reductions. However, there was no indication that profit sharing decreased the perceived risk of investing in the firm. (Reprinted by permission of the publication.)

Prices and rates, Stocks, Influence, Stock prices, Profit sharing

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The internal union political imperative for UAW pattern bargaining

Article Abstract:

Like many industrial unions, the UAW places great emphasis on pattern-following contract settlements. However, research on the rationales for pattern bargaining has been scarce, and evidence testing these rationales has been absent. The usual rationale for pattern bargaining is to take wages out of competition. However, this paper presents evidence of important internal union political reasons for pattern recognition bargaining. If intra-union wage comparisons cause union members to feel unfairly treated, elected leaders will be challenged. Thus, the UAW leadership pursues pattern bargaining to minimize political conflicts and maintain stability. (Reprinted by permission of the publisher.)

Labor Unions and Similar Labor Organizations, Unions-Manufacturing, Negotiation, mediation and arbitration, Collective bargaining, United Automobile Workers, Manufacturing unions

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The inflation-unemployment trade-offs of union members

Article Abstract:

Social preference functions between inflation and unemployment are estimated for individuals classified by union status using Gallup Poll presidential popularity data. We expected union members to assign higher weights to unemployment and lower weights to inflation than those who are not union members, but we found the reverse. Union members weight unemployment relative to inflation less than nonunion members because they weight unemployment less. Given the emphasis that trade union leaders place on reducing unemployment rather than inflation, this suggests a divergence in views between union leaders and the rank and file. (Reprinted by permission of the publisher.)

Officials and employees, Inflation (Finance), Unemployment, Public opinion, Inflation (Economics)

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