Labor Market Segmentation and the Union Wage Premium
AbstractStudies of the earnings of union workers have consistently shown that they earn considerably more than nonunion workers. This paper considers whether part of this observed union/nonunion differential is due to unions organizing high paying primary sector jobs. We extend our earlier work on the dual labor market in which we used an unknown regime switching regression to identify two labor market sectors --a high wage primary sector and a low wage secondary sector. Here we estimate a model where worker's wages are determined by one of three wage equations: a union wage equation, a nonunion primary equation or a nonunion secondary equation. If individuals are in the union sector their sector is treated as known. If they are not then their sector is treated as unknown. Parameter estimates for this model suggest that union/nonunion differences are very large for average workers even when comparing union and nonunion primary workers. We continue to find distinct primary and secondary sectors with wage equations similar to those that would be expected from the dual market perspective. Since it appears that union workers may be receiving large wage premiums it seems likely that there is non-price rationing of union jobs. If there is, our finding inprevious papers of non-price rationing of primary sector jobs may have been due only to the rationing of union jobs. We test for the existence of non-price rationing of nonunion primary sector employment in this three sector model and continue to find evidence that at least black workers find it difficult to secure primary sector employment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1883.
Date of creation: Mar 1986
Date of revision:
Publication status: published as Review of Economics and Statistics, Vol. 26, No. 3, pp. 527-530, August 1988.
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Dickens, William T & Lang, Kevin, 1988. "Labor Market Segmentation and the Union Wage Premium," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 527-30, August.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Assaad, Ragui, 1997. "Kinship ties, social networks, and segmented labor markets: evidence from the construction sector in Egypt," Journal of Development Economics, Elsevier, vol. 52(1), pages 1-30, February.
- Kevin Lang & William T. Dickens, 1987. "Neoclassical and Sociological Perspectives on Segmented Labor Markets," NBER Working Papers 2127, National Bureau of Economic Research, Inc.
- Irene Brambilla & Rafael Dix Carneiro & Daniel Lederman & Guido Porto, 2010.
"Skills, Exports, and the Wages of Seven Million Latin American Workers,"
NBER Working Papers
15996, National Bureau of Economic Research, Inc.
- Irene Brambilla & Rafael Dix-Carneiro & Daniel Lederman & Guido Porto, 2012. "Skills, Exports, and the Wages of Seven Million Latin American Workers," World Bank Economic Review, World Bank Group, vol. 26(1), pages 34-60.
- Irene Brambilla & Rafael Dix Carneiro & Daniel Lederman & Guido Porto, 2011. "Skills, Exports, and the Wages of Seven Million Latin American Workers," CEDLAS, Working Papers 0119, CEDLAS, Universidad Nacional de La Plata.
- LEDUC Kristell & GENEVOIS Anne-Sophie, 2012. "Segmentation du marché du travail - le cas luxembourgeois," CEPS/INSTEAD Working Paper Series 2012-35, CEPS/INSTEAD.
- Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 19-38.
- William T. Dickens & Kevin Lang, 1992. "Labor Market Segmentation Theory: Reconsidering the Evidence," NBER Working Papers 4087, National Bureau of Economic Research, Inc.
- Montgomery, Edward & Shaw, Kathryn, 1997.
"Pensions and Wage Premia,"
Western Economic Association International, vol. 35(3), pages 510-22, July.
- Rudy Fichtenbaum, 2006. "Labour market segmentation and union wage gaps," Review of Social Economy, Taylor & Francis Journals, vol. 64(3), pages 387-420.
- James B. Rebitzer & Michael D. Robinson, 1991.
"Employer Size and Dual Labor Markets,"
NBER Working Papers
3587, National Bureau of Economic Research, Inc.
If references are entirely missing, you can add them using this form.