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Nonunion wage rates and the threat of unionization

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  • Henry S. Farber
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    Abstract

    Using CPS data for 1977-2002, the author tests the standard wage determination model's prediction that the threat of union organization increases nonunion wages and reduces the union/nonunion wage differential. The results are mixed. Estimates employing the predicted probability of union membership as a measure of the union threat show no important link between the union threat and either nonunion wages or the union wage gap. Estimates focusing on two states' introduction of right-to-work laws, which arguably affect wages independently of changes in labor demand, show that in one state the law was associated with a statistically significant drop in nonunion wages. Finally, an analysis of wage data for three industries that underwent deregulation--another natural experiment in which labor demand changes are unlikely to have been a complicating factor--yields stronger evidence of threat effects on nonunion wages than do either of the other two analyses. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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    Bibliographic Info

    Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

    Volume (Year): 58 (2005)
    Issue (Month): 3 (April)
    Pages: 335-352

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    Handle: RePEc:ilr:articl:v:58:y:2005:i:3:p:335-352

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    Cited by:
    1. Telegdy, Álmos, 2013. "A közszféra és a vállalatok bérei közötti átterjedési hatás Magyarországon
      [Public-sector pay spillovers in Hungary: Identification from a large sectoral pay increase]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 555-578.
    2. Francine D. Blau & Lawrence M. Kahn, 2006. "The U.S. gender pay gap in the 1990s: slowing convergence," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(1), pages 45-66, October.
    3. Ruiz-Verdu, Pablo, 2007. "Threat of unionization and nonunion employment," Economics Letters, Elsevier, Elsevier, vol. 96(1), pages 109-115, July.
    4. Stevans, Lonnie, 2007. "The Effect of Right-to-Work Laws on Business and Economic Conditions: A Multivariate Approach," MPRA Paper 5638, University Library of Munich, Germany.
    5. Salvatori, Andrea, 2011. "Union Threat and Non-Union Employment: A Natural Experiment on the Use of Temporary Employment in British Firms," IZA Discussion Papers 5574, Institute for the Study of Labor (IZA).
    6. Ruiz-Verdu, Pablo, 2007. "The economics of union organization: Efficiency, information and profitability," Labour Economics, Elsevier, Elsevier, vol. 14(5), pages 848-868, October.
    7. Coombs, Christopher & Newman, Robert & Cebula, Richard & White, Mary, 2013. "The Bargaining Power of Health Care Unions: Union Wage Premiums for Registered Nurses in Hospitals," MPRA Paper 56223, University Library of Munich, Germany.
    8. Telegdy, Álmos, 2013. "The Effect of Public Wages on Corporate Compensation in Hungary," IZA Discussion Papers 7524, Institute for the Study of Labor (IZA).

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