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This paper analyzes the effect of unions on the profitability of firms under different political and economic environments in Korea. During the authoritarian period (1981–1986), unions lowered firm profitability despite the repression by the state, due to the strong protection of individual workers and the weak discipline in the financial market. During the democratization period (1988–1996), unions lowered firm profitability, but only marginally more than they did during the authoritarian period. In the post-crisis period (1999–2007), unions did not lower firm profitability any longer given the relatively weak protection of individual workers and the stronger discipline in the financial market.