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Estimating union wage effects and the probability of union membership in the U.K. during 1991-2003

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  • Georgios Marios Chrysanthou

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Abstract

Using a dynamic model of unionism and wage determination we find that the unobserved factors that influence union membership also affect wages. We observe a significant decline in trade union membership persistence during the period under analysis. We find that UK trade unions still play a nonnegligible, albeit diminishing, role in wage formation. While unions were unable to establish a wage premium for male members during the two periods considered, the female union wage effect stood at (19.4%, 17.6%) during (1991-1996, 1997-2002) respectively. The endogeneity correction procedure employed yields a discernible pattern of the union wage effect relative to OLS and fixed effects thus, refuting the pessimistic conclusions reached by Freeman and Medoff (1982) and Lewis (1986) that endogeneity correction methodologies do not contribute to our understanding of the union wage effect puzzle.

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Bibliographic Info

Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we1014.

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Date of creation: Jun 2010
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Handle: RePEc:cte:werepe:we1014

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Keywords: Union membership persistence; Union wage effects; Unobserved heterogeneity; Dynamic model of unionism and wage determination;

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