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Nonunion Wage Rates and the Threat of Unionization

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  • Henrys Farber

Abstract

Using CPS data for 1977–2002, the author investigates the extent to which 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 the threat of union organization 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.

Suggested Citation

  • Henrys Farber, 2005. "Nonunion Wage Rates and the Threat of Unionization," ILR Review, Cornell University, ILR School, vol. 58(3), pages 335-352, April.
    • Handle: RePEc:sae:ilrrev:v:58:y:2005:i:3:p:335-352
    DOI: 10.1177/001979390505800302
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    References listed on IDEAS

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    1. O. C. Ashenfelter & G. E. Johnson & J. H. Pencavel, 1972. "Trade Unions and the Rate of Change of Money Wages in United States Manufacturing Industry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 39(1), pages 27-54.
    2. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    3. S. Rosen, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(2), pages 185-196.
    4. Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-1178, December.
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    Cited by:

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    2. Freeman, Richard Barry & Han, Eunice & Madland, David & Duke, Brendan, 2016. "How Does Declining Unionism Affect the American Middle Class and Intergenerational Mobility?," Scholarly Articles 27304672, Harvard University Department of Economics.
    3. James Bishop & Iris Chan, 2019. "Is Declining Union Membership Contributing to Low Wages Growth?," RBA Annual Conference Papers acp2019-06, Reserve Bank of Australia.
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    5. Telegdy, Álmos, 2018. "Public wage spillovers: The role of individual characteristics and employer wage policies," Labour Economics, Elsevier, vol. 55(C), pages 116-129.
    6. Adam Seth Litwin & Or Shay, 2022. "What do unions do… for temps? Collective bargaining and the wage penalty," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(2), pages 193-227, April.
    7. Woods, Keegan & Tan, Kelvin Jui Keng & Faff, Robert, 2019. "Labor unions and corporate financial leverage: The bargaining device versus crowding-out hypotheses," Journal of Financial Intermediation, Elsevier, vol. 37(C), pages 28-44.
    8. Alex Bryson, 2014. "Union wage effects," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-35, July.

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