Section Fiveexit response of leaving for better conditions elsewhere.
Because of the voice mechanism, it is argued that unionized
firms have lower quit rates and encourage firms to pro-vide
more rational and professional management. In turn, these
secondary effects lead to greater productivity.^40
Unions also can have a positive impact on productivity
under certain labor market conditions. This can occur in
situations in which the employer has monopoly power in the
labor market (a condition of monopsony). When unions
negotiate higher wages under such conditions, the economically
rational response of employers is to add more capital per
worker and to enhance the quality of labor. In turn, these
secondary effects have the potential to increase productivity.
However, unions may negotiate more restrictive work rules that
lead to higher levels of employment than are necessary.
Obviously, such secondary effects can lead to decreases in
productiv-ity.^41 A concise summary of the effects of labor
relations on firm productivity is provided in the following:
An important implication of the voice-response
model is that productivity is likely to depend on
the state of labor–management relations in
shops. When those relations are poor,
management is likely to have trouble getting high
productivity. When they are good, workers and