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Wage Dispersion in a Partially Unionized Labor Force

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Author Info
John T. Addison (University of South Carolina (U.S.A.), GEMF (Portugal), and IZA)
Ralph W. Bailey (University of Birmingham (U.K.))
W. Stanley Siebert (University of Birmingham (U.K.) and IZA)

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Abstract

Wage Dispersion in a Partially Unionized Labor Force This paper critiques Card’s (2001) method for analyzing wage dispersion in a partially unionized labor market based on a disaggregation of the population into skill categories. We argue that disaggregation is a good idea, the use of skill categories less so. We offer a modified model in which each worker is assigned a union-membership probability, a predicted union wage, and a predicted nonunion wage. Our model provides a natural three-way decomposition of variance, and is also suited to counterfactual analysis. By way of an application, we examine the effect of de-unionization on wage dispersion in the United Kingdom between 1983 and 1995, reporting that the decline in membership accounts for only about one-fifth of the observed increase in wage dispersion.

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Publisher Info
Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2009-09.

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Length: 45 pages
Date of creation: Jul 2009
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Handle: RePEc:gmf:wpaper:2009-09

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Related research
Keywords: wage dispersion; three-way variance decomposition; bivariate kernel density smoothing; union membership; deunionization.;

Other versions of this item:

Find related papers by JEL classification:
D3 - Microeconomics - - Distribution
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-44, September. [Downloadable!] (restricted)
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  2. Daniele Checchi & Jelle Visser & Herman G. van de Werfhorst, 2007. "Inequality and Union Membership: The Impact of Relative Earnings Position and Inequality Attitudes," IZA Discussion Papers 2691, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Richard B. Freeman, 1980. "Unionism and the dispersion of wages," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(1), pages 3-23, October.
    Other versions:
  4. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier. [Downloadable!] (restricted)
    Other versions:
  5. Bell, Brian D & Pitt, Michael K, 1998. "Trade Union Decline and the Distribution of Wages in the UK: Evidence from Kernel Density Estimation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(4), pages 509-28, November.
  6. Richard B. Freeman, 2005. "What Do Unions Do?-- The 2004 M-Brane Stringtwister Edition," Journal of Labor Research, Transaction Publishers, vol. 26(4), pages 641-668, November. [Downloadable!] (restricted)
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  7. Addison, John T. & Bailey, Ralph & Siebert, W. Stanley, 2003. "The Impact of Deunionisation on Earnings Dispersion Revisited," IZA Discussion Papers 724, Institute for the Study of Labor (IZA). [Downloadable!]
  8. David Card & Thomas Lemieux & W. Craig Riddell, 2004. "Unions and Wage Inequality," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 519-562, October. [Downloadable!] (restricted)
  9. Juan Francisco Canal Domínguez & César Rodríguez Gutiérrez, 2004. "Collective Bargaining and Within-firm Wage Dispersion in Spain," British Journal of Industrial Relations, Blackwell Publishers Ltd/London School of Economics, vol. 42(3), pages 481-506, 09. [Downloadable!] (restricted)
  10. 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)
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