Public Sector Collective Bargaining’s Effect on Government Spending, Wages, and Employment 1957-2011
AuthorBelt, Cameron Michael
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This paper examines whether state-specific public sector collective bargaining institutions affect the per-capita level of government spending, employment, and payrolls. In order to empirically determine whether a more “pro”-union institutional environment leads to increases in these variables this study uses a panel data set of the 50 states over a 55 year period and utilizes the NBER Collective Bargaining ranking scale. This study is the first to explicitly look at the effect of compulsory vs. non-compulsory public sector collective bargaining laws and is also the first to use synthetic control methods to estimate the relationship. Results show that the more favorable the legal environment for public unions government expenditures increase from $104.1-125.1 to $546.0-653.5 per-capita. The results show a statistically significant, yet low positive effect on employment and wages. It is suggested that the increased expenditures may be due to other factors such as increased pensions or other benefits.