The Product Market Impacts of Unionization in a Merging Firm: Evidence from the US Airline Industry

Mentor: Qi Ge (Department of Economics)

Scholar: Shijun Hong (Class of 2025)

Professor Ge and I are Interested in the impact of labor unions on merging firms’ product quality and prices. For the summer project, we devoted our attention to related theories and literature. Theoretically, both the product quality and the price effects of labor unionization on merging firms are a priori indeterminate. Consistent with the theoretical prediction, the existing empirical literature does not agree on the direction of the effects. More importantly, a significant challenge arises from the concurrent incidence of merger events and unionization episodes, a phenomenon commonly observed across various industries. Our literature review highlights two key observations: 1) There is a limited amount of research focusing on the quality impact of unionization, and 2) none of the existing literature adequately distinguishes between the effects of mergers and unionization. The goal of our study is thus to bridge these two major gaps in the literature. As part of the project, I also constructed detailed timelines visualizing the timing of the airline unionization and episodes considered in our project. In the next stage of our project, we plan to conduct a separate and comprehensive analysis of the impacts of mergers and unionization using data from the U.S. Airline Industry.

The Timelines Visualizing the Timing of the Airline Unionization and Episodes Considered in Our Project.

In the end, I hope our research can adequately distinguish between the effects of mergers and unionization. Through this way, we can not only make contributions to the limited amount of relevant research focusing on the US Airline Industry but also help the later studies related to unionization and mergers effects.