At the level of theory, the effect of collective bargaining on innovation is contested. The large proponderance of the U.S. evidence clearly points to adverse effects, but other-country experience suggests that certain industrial-relations systems, or the wider regulatory apparatus, might even tip the balance in favor of unions. Our pooled cross- section and difference-in-differences estimates provide some weak evidence that German collective bargaining inhibits innovation. However, in conjunction with workplace representation, there is the suggestion that it might actually foster innovative activity.
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