Wages and Plant Size: A Spillover Effect?

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Abstract
The authors use British workplace data for 1980–98 to examine whether increased human resource management (HRM) practices coincided with union decline, consistent with the hypothesis that such practices act as a substitute for unionization. Two initial analyses show no important differences between union and non-union sectors or between newer workplaces (which are likelier to be non-union) and older ones in the pattern of HRM practices over time; and the study's longitudinal analysis picks up no evidence of faster union decline in workplaces or industries that adopted HRM practices than in those that did not. Not only is the hypothesized substitution effect thus not supported, but the authors even uncover some evidence of a complementarity between unions and HRM practices. The authors conclude that increased use of HRM practices is probably not an important factor underpinning union decline in Britain.

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