Abstract:

This analysis characterizes empirically how good labour relations can alleviate the negative impact on productivity of regulatory constraints or workforce opposition. Our evidence of good labour relations lies in the existence of binding collective agreements, at the firm or at the industry level. The estimations are based on a unique dataset collected by the Banque de France about the obstacles French firms may face in increasing their utilisation of production factors. Data are an unbalanced sample of 9,185 observations, corresponding to 2,134 companies, over the period 1991-2008. Our main results may be summarised as follows: i) ‘workforce or union opposition ’ interacted with ‘regulatory constraints ’ has a negative significant impact on total factor productivity (TFP). Regulatory constraints would become really binding when workers or unions use them as a tool to oppose management’s decisions; ii) ‘workforce or union opposition ’ interacted with ‘firm agreement’ has a positive significant impact on TFP. Firm agreements, which reflect good-quality local labour relations, would be used by firms to offset the negative impact of local opposition from workers or unions; iii) ‘regulatory constraints ’ interacted with ‘branch agreement ’ has a positive significant impact on TFP. Branch agreements, which can only be obtained if labour relations at the industry level are supportive, would be used by branches to offset the negative impact of regulator