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Does Membership Payoff for Covered Workers? A Distributional Analysis of the Free Rider Problem

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  • Ozkan Eren

Abstract

This paper examines the union membership wage premium among private sector employees covered by collective bargaining agreements. Using Current Population Survey data for 2000–2003, the author not only estimates the conditional mean wage premium—the metric on which most previous research has focused—but also employs recently developed (instrumental) quantile regression techniques to estimate the wage effect of membership across the wage distribution. Members enjoyed, on average, a wage premium of 9% over comparable covered nonmembers. Further analyses find no evidence that this mean premium is explained either by unobserved differences or by measurement error. The author also finds that a narrow focus on the mean impact partially masks heterogeneity in the impact across the distribution. Notably, membership wage effects were considerably more pronounced for low wage earners than for high wage earners.

Suggested Citation

  • Ozkan Eren, 2009. "Does Membership Payoff for Covered Workers? A Distributional Analysis of the Free Rider Problem," ILR Review, Cornell University, ILR School, vol. 62(3), pages 367-380, April.
    • Handle: RePEc:sae:ilrrev:v:62:y:2009:i:3:p:367-380
    DOI: 10.1177/001979390906200306
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    References listed on IDEAS

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    1. Alison L. Booth & Mark L. Bryan, 2004. "The Union Membership Wage-Premium Puzzle: Is There a Free Rider Problem?," ILR Review, Cornell University, ILR School, vol. 57(3), pages 402-421, April.
    2. Edward J. Schumacher, 1999. "What Explains Wage Differences Between Union Members and Covered Nonmembers?," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 493-512, January.
    3. Blakemore, Arthur E & Hunt, Janet C & Kiker, B F, 1986. "Collective Bargaining and Union Membership Effects on the Wages of Male Youths," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 193-211, April.
    4. Barry T. Hirsch & David A. MacPherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
    5. Alison L. Booth, 1985. "The Free Rider Problem and a Social Custom Model of Trade Union Membership," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(1), pages 253-261.
    6. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    7. Barry T. Hirsch & Edward J. Schumacher, 2004. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 689-722, July.
    8. Andrew K. G. Hildreth, 2000. "Union Wage Differentials for Covered Members and Nonmembers in Great Britain," Journal of Labor Research, Transaction Publishers, vol. 21(1), pages 133-147, January.
    9. Chernozhukov, Victor & Hansen, Christian, 2006. "Instrumental quantile regression inference for structural and treatment effect models," Journal of Econometrics, Elsevier, vol. 132(2), pages 491-525, June.
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    Cited by:

    1. V. Chernozhukov & C. Hansen, 2013. "Quantile Models with Endogeneity," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 57-81, May.
    2. Goerke, Laszlo & Pannenberg, Markus, 2015. "Trade union membership and sickness absence: Evidence from a sick pay reform," Labour Economics, Elsevier, vol. 33(C), pages 13-25.
    3. Balestra, Simone & Backes-Gellner, Uschi, 2017. "Heterogeneous returns to education over the wage distribution: Who profits the most?," Labour Economics, Elsevier, vol. 44(C), pages 89-105.
    4. Clément Brébion, 2020. "The impact of works council membership on wages in Germany: a case of strategic discrimination?," Working Papers halshs-02436686, HAL.
    5. David Brady & Regina Baker & Ryan Finnigan, 2013. "When Unionization Disappears: State-Level Unionization and Working Poverty in the U.S," LIS Working papers 590, LIS Cross-National Data Center in Luxembourg.

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