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Does Measurement Error Bias Fixed-Effects Estimates of the Union Wage Effect?

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  • Swaffield, Joanna K

Abstract

This paper compares estimates of the union wage effect using cross-section and panel estimators for male manual full-time and female employees using data from the British Household Panel Survey, 1991-97. A comparison of cross-section and panel estimates suggests that unobserved heterogeneity biases cross-section estimates upwards. However, it is also found that the divergence between estimates is overstated because measurement error biases the fixed-effects estimates downward. Reducing measurement error in the union variable by taking averages and restricting changes in union status to occur only when a change in employer and/or job takes place increases fixed-effects estimates of the union wage effect. Copyright 2001 by Blackwell Publishing Ltd

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Bibliographic Info

Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.

Volume (Year): 63 (2001)
Issue (Month): 4 (September)
Pages: 437-57

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Handle: RePEc:bla:obuest:v:63:y:2001:i:4:p:437-57

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Cited by:
  1. Manquilef-Bächler, Alejandra A. & Arulampalam, Wiji & Smith, Jennifer C., 2009. "Differences in Decline: Quantile Regression Analysis of Union Wage Differentials in the United Kingdom, 1991-2003," IZA Discussion Papers 4138, Institute for the Study of Labor (IZA).
  2. Lixin Cai & C. Jeffrey Waddoups, 2008. "Union Wage Effects in Australia: Evidence from Panel Data," CEPR Discussion Papers 585, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. Georgios Marios Chrysanthou, 2007. "Determinants of Trade Union Membership in Great Britain During 1991-2003," Discussion Papers 07/01, Department of Economics, University of York.
  4. Julian Cristia & Alejo Czerwonko & Pablo Garofalo, 2010. "Does ICT Increase Years of Education? Evidence from Peru," OVE Working Papers 0110, Inter-American Development Bank, Office of Evaluation and Oversight (OVE).
  5. Colin Green & J S Heywood, 2010. "Unions, Dissatisfied Workers and Sorting," Working Papers 615292, Lancaster University Management School, Economics Department.
  6. Georgios Marios Chrysanthou, 2008. "Estimating Union Wage Effects in Great Britain During 1991-2003," Discussion Papers 08/12, Department of Economics, University of York.
  7. Disney, Richard F & Gosling, Amanda, 2003. "A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990's," CEPR Discussion Papers 3787, C.E.P.R. Discussion Papers.
  8. Koevoets, Wim, 2007. "Union wage premiums in Great Britain: Coverage or membership?," Labour Economics, Elsevier, vol. 14(1), pages 53-71, January.
  9. A Charlwood & K Hansen & David Metcalf, 2000. "Unions and the Sword of Justice: Unions and Pay Systems, Pay Inequality, Pay Discrimination and Low Pay," CEP Discussion Papers dp0452, Centre for Economic Performance, LSE.

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