Union Effects on Wages and the Workplace

Paper Session

Saturday, Jan. 7, 2017 10:15 AM – 12:15 PM

Hyatt Regency Chicago, Gold Coast
Hosted By: Labor and Employment Relations Association
  • Chair: Barry Hirsch, Georgia State University

Sources of the Union Wage Gap: Results from High-Dimensional Fixed Effects Regression Models

John Addison
,
University of South Carolina
Pedro Portugal
,
Bank of Portugal
Hugo Vilares
,
Bank of Portugal

Abstract

We estimate the impact of union density on wages using matched employer-employee-contract data for Portugal. We extend Gelbach's (2016) omitted variable bias decomposition procedure to obtain the contribution of worker, firm, and job-title heterogeneity to the union wage premium. The principal result is the dominance of the allocation of workers among firms with different wage policies. The unobserved skills of union workers have a modest impact on wages; unions do not place their members into higher job-titles along the job career hierarchy; the wage cushion enables firms to partially undo the bargained wage; and, while fringes matter, matching does not.

Revisiting Union Wage Effects Using the Displaced Worker Surveys

Barry Hirsch
,
Georgia State University
Abhir Kulkarni
,
Georgia State University

Abstract

Empirical estimation of union wage effects in the U.S. has been challenged by the need to control for typically unobserved worker heterogeneity and endogenous job change. The biennial Displaced Workers Supplement files from the Current Population Survey arguably provide an opportunity to account for these challenges. Examining job switching among union and nonunion workers displaced by exogenous plant closings from 1994 (the first year in which the DWS recorded union status)through 2014, we examine employment transitions and wage changes between union and nonunion jobs. Consistent with early evidence from the DWS, our initial findings are that longitudinal estimates are roughly similar to standard cross-sectional evidence, suggesting minimal ability bias on average. Separate analyses by skill type based on observed skills indicate two-sided selection, with positive employer selection in the left tail and negative employee selection in the right tail. Pay compression observed in union jobs partly reflects compressed worker skills.

Union Decline and the Wages of Nonunion Workers

Jake Rosenfeld
,
Washington University-St Louis
Jennifer Laird
,
University of Washington
Patrick Denice
,
University of Washington

Abstract

It is widely recognized that unions increase relative wages for their members. But there is also robust evidence that labor markets in which unions are more highly organized have positive spillover effects on the wages of nonunion workers. In this paper, we show how the secular decline in private sector unionism has placed downward pressure on the wages of nonunion workers, leading to slower economy-wide wage growth and widening inequality.
Discussant(s)
Brigham R. Frandsen
,
Brigham Young University
Henry Farber
,
Princeton University
John Budd
,
University of Minnesota
JEL Classifications
  • J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining