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Estimating the Union Earnings Effect Using a Sample of Displaced Workers

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Author Info
Steven Raphael
Abstract

This paper improves on past longitudinal estimates of the union earnings effect by using a sample of workers for whom the error in measuring changes in union status is minimized. I use a sample of workers displaced by plant closings from the 1994 Current Population Survey Displaced Workers file to estimate the effects of union membership on weekly earnings and the probability of membership in a group health plan. Several tests for selection bias in cross-sectional estimates are evaluated. In contrast to past research, I find very little evidence of selection bias. In pre-post displacement difference equations, estimates of the union earnings effect range from 15 to 21 percent and are between roughly 70 and 90 percent of the cross-sectional differentials. Moreover, the hypothesis of equal cross-section and longitudinal point estimates cannot be rejected in any of the specifications tested. Similar results are found for coverage in a group health insurance plan.

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Paper provided by Department of Economics, UC San Diego in its series University of California at San Diego, Economics Working Paper Series with number 97-09.

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Date of creation: Mar 1997
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Handle: RePEc:cdl:ucsdec:97-09

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  1. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July. [Downloadable!] (restricted)
  2. Freeman, Richard B, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 643-73, June. [Downloadable!] (restricted)
  3. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-80, October. [Downloadable!] (restricted)
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  4. Gibbons, Robert & Katz, Lawrence F, 1992. "Does Unmeasured Ability Explain Inter-industry Wage Differentials?," Review of Economic Studies, Blackwell Publishing, vol. 59(3), pages 515-35, July. [Downloadable!] (restricted)
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  5. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January. [Downloadable!] (restricted)
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  6. Jakubson, George, 1991. "Estimation and Testing of the Union Wage Effect Using Panel Data," Review of Economic Studies, Blackwell Publishing, vol. 58(5), pages 971-91, October. [Downloadable!] (restricted)
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