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IZA Discussion Paper No. 18128
September 2025
Unions in Developing Countries

The effects of trade unions on firm performance are theoretically ambiguous. The sizable empirical literature on their effects is almost exclusively confined to developed countries, particularly those in North America and Europe. We contribute to the literature by estimating union effects on firm performance in about 40,000 firms in 77 developing countries between 2002 and 2011. In doing so, we exploit standardized firm level data collected by the World Bank. We find positive partial correlations between unionization and firm labor productivity and wages, especially in lower-income countries. These positive effects persist when we instrument for union presence, consistent with recent evidence of union positive effects on productivity and wages in western industrialized countries.

Communications
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Network Coordination
Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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