An analysis of the impact of unionization on efficiency: evidence from a meta-frontier analysis

Abstract

This article examines the impact of unions on the efficiency of establishments in the manufacturing industry by comparing the results from two different empirical strategies: stochastic frontier analysis (SFA) and meta-frontier analysis (MFA). While SFA concludes that union establishments show higher technological efficiency, the results are the opposite when estimating production functions with MFA. In SFA, unionized establishments appear to be more efficient because they remain closer to their own production frontier; however, in MFA - where groups with heterogeneous technology can be compared - we find that nonunionized establishments are more efficient because they are closer to the meta-frontier than their unionized counterparts.