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    Pros and Cons of Unions

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    Explain the logic of each of the following statements:

    a. By constraining the decisions of management, unions reduce efficiency and productivity growth.
    b. As collective-voice institutions, unions increase productivity by reducing worker turnover, inducing managerial efficiency, and enhancing worker security.

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    Solution Preview

    a. In a competitive economy, those companies who are free from the impediments of collective bargaining will have an advantage over those who are not. Unionized companies will need to reduce their profits in order to satisfy the union's demands. ...

    Solution Summary

    Unions can either reduce productivity or increase it, depending on managerial response.