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Whose wages do unions raise? A dynamic model of unionism and wage rate determination for young men

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Author Info
Francis Vella (Rutgers University and IFS, Department of Economics, New Jersey Hall, New Brunswick, NJ 00903-5055, USA)
Marno Verbeek (KU Leuven and Tilburg University, Center for Economic Studies, Naamsestraat 69, B-3000 Leuven, Belgium)
Abstract

We estimate the union premium for young men over a period of declining unionization (1980-87) through a procedure which identifies the alternative sources of the endogeneity of union status. While we estimate the average increase in wages resulting from union employment to be in excess of 20% we find that the return to unobserved heterogeneity operating through union status is substantial and that the union premium is highly variable. We also find that the premium is sensitive to the form of sorting allowed in estimation. Moreover, the data are consistent with comparative advantage sorting. Our results suggest that the unobserved heterogeneity which positively contributes to the likelihood of union membership is associated with higher wages. We are unable, however, to determine whether this is due to the ability of these workers to extract monopoly rents or whether it reflects the more demanding hiring standards of employers faced by union wages. © 1998 John Wiley & Sons, Ltd.

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File URL: http://qed.econ.queensu.ca:80/jae/1998-v13.2/
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 13 (1998)
Issue (Month): 2 ()
Pages: 163-183
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Handle: RePEc:jae:japmet:v:13:y:1998:i:2:p:163-183

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  1. 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. [Downloadable!]
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  2. Síle O’Dorchai & Robert Plasman & François Rycx, 2007. "The Part-Time Wage Penalty in European Countries: How Large Is It for Men?," IZA Discussion Papers 2591, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Iván Fernández-Val & Francis Vella, 2007. "Bias Corrections for Two-Step Fixed Effects Panel Data Estimators," IZA Discussion Papers 2690, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. Tavneet Suri, 2006. "Selection and Comparative Advantage in Technology Adoption," Working Papers 944, Economic Growth Center, Yale University. [Downloadable!]
  5. Troske, Kenneth R. & Voicu, Alexandru, 2004. "Joint Estimation of Sequential Labor Force Participation and Fertility Decisions Using Markov Chain Monte Carlo Techniques," IZA Discussion Papers 1251, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Victor Chernozhukov & Ivan Fernandez-Val & Alfred Galichon, 2007. "Quantile And Probability Curves Without Crossing," Boston University - Department of Economics - Working Papers Series WP2007-011, Boston University - Department of Economics. [Downloadable!]
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  7. Jean-Francois Richard & Wei Zhang, 2007. "Efficient High-Dimensional Importance Sampling," Working Papers 321, University of Pittsburgh, Department of Economics, revised Jan 2007. [Downloadable!]
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