We exploit exogenous variance in the price of union membership caused by changed tax treatment to identify the effects of changes in workplace union density on workplace productivity and wages in the population of Norwegian manufacturing firms over the period 2001 to 2012. Increases in union density lead to substantial increases in total factor productivity having accounted for the potential endogeneity of unionisation. Unions are able to capitalise on their increased bargaining power clawing back part of that additional productivity through a higher union wage premium, but not at high productivity firms where unions put a cap on wage growth. Joint with Erling Barth and Harald Dale-Olsen.

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