Do Labor Unions Hinder or Boost International Outsourcing? Evidence from U.S. Manufacturing

Abstract

This article provides empirical evidence that labor unions can influence firms’ international outsourcing decisions in the U.S. manufacturing sector. There is a negative effect of the current level of unionism and a positive effect of the previous level of unionism on the firms’ international outsourcing intensity. Our results support the proposition put forward by Lommerud et al. (2009) that labor unions hinder firms’ international outsourcing behavior, if the decision to outsource is made no later than the wage-employment bargaining. However, stronger labor unions still induce international outsourcing if firms’ decisions are made subsequent to wage-employment bargaining.