Imperfect Competition, Work Practices and Productivity Growth.

Many explanations for the recent productivity growth improvement in Britain have centered on changes in the labor market, arising from the changing role of trade unions for example. This paper asks whether changes in the product market are part of the story. The author proposes a model of imperfectly competitive firms and unionized workers that shows how product market conditions affect work practices and, thereby, productivity growth. Using data on a panel of eighty-one U.K. industries, 1980-86, he finds that changes in product market conditions are important in explaining productivity growth in the 1980s. Copyright 1991 by Blackwell Publishing Ltd