IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp4138.html
   My bibliography  Save this paper

Differences in Decline: Quantile Regression Analysis of Union Wage Differentials in the United Kingdom, 1991-2003

Author

Listed:
  • Manquilef-Bächler, Alejandra A.

    (University of Warwick)

  • Arulampalam, Wiji

    (University of Warwick)

  • Smith, Jennifer C.

    (University of Warwick)

Abstract

Wage premia related to union membership and coverage are examined over 1991-2003, a period involving first decline, then stabilization, of unionization. Differences in union premia across workers and over time are studied using individual-level British Household Panel Survey data and quantile regression techniques allowing for endogeneity of the membership decision. Raw differentials suggest the presence of large positive membership and coverage premia that are stronger at the bottom of the wage distribution in both private and public sectors. After controlling for other factors influencing wages, union asymmetries are no longer apparent in the private sector. When endogeneity of union membership is taken into account, the private sector union wage premium disappears, indicating that individuals positively select into unions. In contrast, the public sector total union wage premium remains significant – entirely due to a coverage effect; it is stronger at the bottom among males, while for females the premium is constant across workers and substantial over the whole period, reflecting the continuing strength of public sector unions. Once we control for endogeneity, the membership premium is nowhere significant; there is no free rider puzzle in the private sector, as there is no coverage premium, but the puzzle persists for the public sector.

Suggested Citation

  • Manquilef-Bächler, Alejandra A. & Arulampalam, Wiji & Smith, Jennifer C., 2009. "Differences in Decline: Quantile Regression Analysis of Union Wage Differentials in the United Kingdom, 1991-2003," IZA Discussion Papers 4138, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4138
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp4138.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    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. Alison L. Booth & Marco Francesconi & Gylfi Zoega, 2003. "Unions, Work-Related Training, and Wages: Evidence for British Men," ILR Review, Cornell University, ILR School, vol. 57(1), pages 68-91, October.
    3. Budd, John W & Na, In-Gang, 2000. "The Union Membership Wage Premium for Employees Covered by Collective Bargaining Agreements," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 783-807, October.
    4. Andrews, Martyn J. & Stewart, Mark B. & Swaffield, Joanna K. & Upward, Richard, 1998. "The estimation of union wage differentials and the impact of methodological choices," Labour Economics, Elsevier, vol. 5(4), pages 449-474, December.
    5. Bryson, Alex, 2002. "The union membership wage premium: an analysis using propensity score matching," LSE Research Online Documents on Economics 4953, London School of Economics and Political Science, LSE Library.
    6. Sims,Christopher A. (ed.), 1994. "Advances in Econometrics," Cambridge Books, Cambridge University Press, number 9780521444606.
    7. Blackaby, D. H. & Murphy, P. D. & Sloane, P. J., 1991. "Union membership, collective bargaining coverage and the trade union mark-up for Britain," Economics Letters, Elsevier, vol. 36(2), pages 203-208, June.
    8. Stewart, Mark B, 1991. "Union Wage Differentials in the Face of Changes in the Economic and Legal Environment," Economica, London School of Economics and Political Science, vol. 58(230), pages 155-172, May.
    9. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    10. Green, Francis, 1988. "The trade union wage gap in Britain: Some new estimates," Economics Letters, Elsevier, vol. 27(2), pages 183-187.
    11. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731.
    12. Blanchflower, David G, 1991. "Fear, Unemployment and Pay Flexibility," Economic Journal, Royal Economic Society, vol. 101(406), pages 483-496, May.
    13. Sims,Christopher A. (ed.), 1994. "Advances in Econometrics," Cambridge Books, Cambridge University Press, number 9780521444590.
    14. David G. Blanchflower & Alex Bryson, 2010. "The Wage Impact of Trade Unions in the UK Public and Private Sectors," Economica, London School of Economics and Political Science, vol. 77(305), pages 92-109, January.
    15. Moshe Buchinsky, 1998. "The dynamics of changes in the female wage distribution in the USA: a quantile regression approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(1), pages 1-30.
    16. Erling Barth & Oddbjørn Raaum & Robin Naylor, 2000. "Union Wage Effects: Does Membership Matter?," Manchester School, University of Manchester, vol. 68(3), pages 259-275, June.
    17. Stephen Machin, 2004. "Factors of Convergence and Divergence in Union Membership," British Journal of Industrial Relations, London School of Economics, vol. 42(3), pages 423-438, September.
    18. Lanot, Gauthier & Walker, Ian, 1998. "The union/non-union wage differential: An application of semi-parametric methods," Journal of Econometrics, Elsevier, vol. 84(2), pages 327-349, June.
    19. Stephen Machin, 2000. "Union Decline in Britain," British Journal of Industrial Relations, London School of Economics, vol. 38(4), pages 631-645, December.
    20. Andrews, Martyn J & Bell, David N F & Upward, Richard, 1998. "Union Coverage Differentials. Some Estimates for Britain Using the New Earnings Survey Panel Dataset," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(1), pages 47-77, February.
    21. Joanna K. Swaffield, 2001. "Does Measurement Error Bias Fixed‐effects Estimates of the Union Wage Effect?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 437-457, September.
    22. Barth, Erling & Raaum, Oddbjorn & Naylor, Robin, 2000. "Union Wage Effects: Does Membership Matter?," Manchester School, University of Manchester, vol. 68(3), pages 259-275, June.
    23. Niels-Hugo Blunch & Dorte Verner, 2004. "Asymmetries in the Union Wage Premium in Ghana," The World Bank Economic Review, World Bank, vol. 18(2), pages 237-252.
    24. Reilly, Kevin T, 1996. "Does Union Membership Matter? The Effect of Establishment Union Density on the Union Wage Differential," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 547-557, August.
    25. Stewart, Mark B, 1983. "Relative Earnings and Individual Union Membership in the United Kingdom," Economica, London School of Economics and Political Science, vol. 50(198), pages 111-125, May.
    26. David Blanchflower & Alex Bryson, 2004. "The Union Wage Premium in the US and the UK," CEP Discussion Papers dp0612, Centre for Economic Performance, LSE.
    27. Stewart, Mark B, 1995. "Union Wage Differentials in an Era of Declining Unionization," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 143-166, May.
    28. Moshe Buchinsky, 2001. "Quantile regression with sample selection: Estimating women's return to education in the U.S," Empirical Economics, Springer, vol. 26(1), pages 87-113.
    29. Forth, John & Millward, Neil, 2002. "Union effects on pay levels in Britain," Labour Economics, Elsevier, vol. 9(4), pages 547-561, September.
    30. Robinson, Chris, 1989. "Union Endogeneity and Self-selection," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 106-112, January.
    31. Swaffield, Joanna K, 2001. "Does Measurement Error Bias Fixed-Effects Estimates of the Union Wage Effect?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 437-457, September.
    32. N. C. O'Leary & P. D. Murphy & D. H. Blackaby, 2004. "Quantile Regression Estimates of the Union Wage Effect for Great Britain," Manchester School, University of Manchester, vol. 72(4), pages 497-514, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Siew Ching Goy & Geraint Johnes, 2015. "Differences In Decline: Quantile Regression Of Male–Female Earnings Differential In Malaysia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(04), pages 1-20.
    2. Nina Torm, 2018. "Does union membership pay off?: Evidence from Vietnamese SMEs," WIDER Working Paper Series 71, World Institute for Development Economic Research (UNU-WIDER).
    3. Chrysanthou, Georgios Marios, 2014. "Heterogeneity, Endogeneity, Measurement Error and Identification of the Union Wage Impact," QM&ET Working Papers 14-4, University of Alicante, D. Quantitative Methods and Economic Theory, revised 05 Nov 2014.
    4. Nina Torm, 2018. "Does union membership pay off?: Evidence from Vietnamese SMEs," WIDER Working Paper Series wp-2018-71, World Institute for Development Economic Research (UNU-WIDER).
    5. Anna-Leena Asikainen & Giovanni Mangiarotti, 2017. "Open innovation and growth in IT sector," Service Business, Springer;Pan-Pacific Business Association, vol. 11(1), pages 45-68, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrews, Martyn J. & Stewart, Mark B. & Swaffield, Joanna K. & Upward, Richard, 1998. "The estimation of union wage differentials and the impact of methodological choices," Labour Economics, Elsevier, vol. 5(4), pages 449-474, December.
    2. Koevoets, Wim, 2007. "Union wage premiums in Great Britain: Coverage or membership?," Labour Economics, Elsevier, vol. 14(1), pages 53-71, January.
    3. Mathieu Bunel & Gilles Raveaud, 2011. "Union Membership does not pay," Working Papers halshs-00868217, HAL.
    4. Mathieu Bunel & Gilles Raveaud, 2012. "Union Membership does not pay: Evidence from recent French Micro Data," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201232, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    5. 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.
    6. Héctor Gutiérrez Rufrancos, 2019. "Are There Gains to Joining a Union? Evidence from Mexico," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 676-712, September.
    7. Laszlo Goerke & Markus Pannenberg, 2012. "Risk Aversion and Trade‐Union Membership," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 275-295, June.
    8. John H. Pencavel, 2004. "The Surprising Retreat of Union Britain," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000, pages 181-232, National Bureau of Economic Research, Inc.
    9. Georgios Marios Chrysanthou, 2007. "Determinants of Trade Union Membership in Great Britain During 1991-2003," Discussion Papers 07/01, Department of Economics, University of York.
    10. Chrysanthou, Georgios Marios, 2014. "Heterogeneity, Endogeneity, Measurement Error and Identification of the Union Wage Impact," QM&ET Working Papers 14-4, University of Alicante, D. Quantitative Methods and Economic Theory, revised 05 Nov 2014.
    11. David Blanchflower & Alex Bryson, 2004. "The Union Wage Premium in the US and the UK," CEP Discussion Papers dp0612, Centre for Economic Performance, LSE.
    12. Blanchflower, D-G, 1997. "Changes Over Time in Union Relative Wage Effects in Great Britain and the United States," Papers 15, Centre for Economic Performance & Institute of Economics.
    13. Manuel Arellano & Stéphane Bonhomme, 2017. "Quantile Selection Models With an Application to Understanding Changes in Wage Inequality," Econometrica, Econometric Society, vol. 85, pages 1-28, January.
    14. Lanot, Gauthier & Walker, Ian, 1998. "The union/non-union wage differential: An application of semi-parametric methods," Journal of Econometrics, Elsevier, vol. 84(2), pages 327-349, June.
    15. Albrecht, James & van Vuuren, Aico & Vroman, Susan, 2009. "Counterfactual distributions with sample selection adjustments: Econometric theory and an application to the Netherlands," Labour Economics, Elsevier, vol. 16(4), pages 383-396, August.
    16. Manuel Arellano & Stéphane Bonhomme, 2017. "Sample Selection in Quantile Regression: A Survey," Working Papers wp2018_1702, CEMFI.
    17. Manuel Arellano & Stéphane Bonhomme, 2017. "Sample Selection in Quantile Regression: A Survey," Working Papers wp2017_1702, CEMFI.
    18. N. C. O'Leary & P. D. Murphy & D. H. Blackaby, 2004. "Quantile Regression Estimates of the Union Wage Effect for Great Britain," Manchester School, University of Manchester, vol. 72(4), pages 497-514, July.
    19. Chris Herbst & Erdal Tekin, 2011. "Child care subsidies and childhood obesity," Review of Economics of the Household, Springer, vol. 9(3), pages 349-378, September.
    20. Alex Bryson, 2002. "The Union Membership Wage Premium: An Analysis Using Propensity Score Matching," CEP Discussion Papers dp0530, Centre for Economic Performance, LSE.

    More about this item

    Keywords

    union membership premium; quantile regression; endogenous union membership;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp4138. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.