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Labour market segmentation and union wage gaps

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  • Rudy Fichtenbaum
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    Abstract

    There has been a great deal of research regard the effects of unions on union - non-union wage gap. Most of the studies regarding the impact of unions on wages have assumed that apart from the division between union and non-union workers, the labour market is relatively homogeneous. A number of economists, however, have argued that the labour market is segmented, implying that there are distinct labour markets and that some workers employment opportunities are concentrated in “bad jobs” while other workers employment opportunities are concentrated in “good jobs” which are rationed. This paper will explore whether the relative wage differential between union and non-union workers differs between the independent primary, subordinate primary and secondary labour markets. Labour market segments are defined using “job zones”. “Job zones” are distinct groups defined by the level of specific vocational preparation necessary for a particular occupation, allowing for the comparison of skill levels and training for each occupation. The data on “job zones” comes from the Occupational Information Network database (O*Net). We estimate separate equations for union and non-union workers in each segment using data from the Current Population Survey and calculate union non-union differentials for each labour market segment. The findings of this paper suggest that the greatest differentials are in secondary labour markets followed by differentials in the subordinate primary labour market and that the smallest wage differentials are in the independent primary labour market.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/00346760600892808
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Review of Social Economy.

    Volume (Year): 64 (2006)
    Issue (Month): 3 ()
    Pages: 387-420

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    Handle: RePEc:taf:rsocec:v:64:y:2006:i:3:p:387-420

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    Web page: http://www.tandfonline.com/RRSE20

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    Related research

    Keywords: wages; unions; segmented labor markets;

    References

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    1. Steven Raphael, 2000. "Estimating the union earnings effect using a sample of displaced workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 503-521, April.
    2. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
    3. Thomas Lemieux, 1993. "Unions and Wage Inequality in Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 69-108 National Bureau of Economic Research, Inc.
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    5. Barry T. Hirsch, 2004. "Reconsidering Union Wage Effects: Surveying New Evidence on an Old Topic," Journal of Labor Research, Transaction Publishers, vol. 25(2), pages 233-266, April.
    6. (*), Nigel Rice & Paul Contoyannis, 2001. "The impact of health on wages: Evidence from the British Household Panel Survey," Empirical Economics, Springer, vol. 26(4), pages 599-622.
    7. Barry T. Hirsch & Edward J. Schumacher, 1998. "Unions, Wages, and Skills," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 201-219.
    8. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September.
    9. Miller, Paul & Mulvey, Charles, 1996. "Unions, Firm Size and Wages," The Economic Record, The Economic Society of Australia, vol. 72(217), pages 138-53, June.
    10. William T. Dickens & Kevin Lang, 1986. "Labor Market Segmentation and the Union Wage Premium," NBER Working Papers 1883, National Bureau of Economic Research, Inc.
    11. María A.Davia & Virginia Hernanz, 2004. "Temporary employment and segmentation in the Spanish labour market: An empirical analysis through the study of wage differentials," Spanish Economic Review, Springer, vol. 6(4), pages 291-318, December.
    12. Oster, Gerry, 1979. "A Factor Analytic Test of the Theory of the Dual Economy," The Review of Economics and Statistics, MIT Press, vol. 61(1), pages 33-39, February.
    13. David G. Blanchflower & Alex Bryson, 2004. "What Effect Do Unions Have on Wages Now and Would Freeman and Medoff Be Surprised?," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 383-414, July.
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