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Returns to Seniority in Union and Nonunion Jobs: A New Look at the Evidence

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  • Katharine G. Abraham
  • Henry S. Farber

Abstract

One of the most prominent features of U.S. unionism is the key role played by seniority. However, in cross-sectional data, the positive association between seniority and earnings is typically much stronger for nonunion workers than for union workers. This finding has puzzled previous researchers, since it seems inconsistent with the generalization that seniority is more important in the union sector than in the nonunion sector. We show that standard estimates of the return to seniority are likely to be biased upward and argue that the bias is likely to be larger in the nonunion sector than in the union sector. Corrected estimates imply that the return to seniority is, in fact, larger in the union sector than in the nonunion sector.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2368.

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Date of creation: Aug 1987
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Publication status: published as Industrial and Labor Relations Review, Vol. 42, No. 1, pp. 3-19, (October 1988).
Handle: RePEc:nbr:nberwo:2368

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  1. Joseph Altonji & R. Shakotko, 1985. "Do Wages Rise with Job Seniority?," Working Papers 567, Princeton University, Department of Economics, Industrial Relations Section..
  2. Farrell Bloch & Mark S. Kuskin, 1978. "Wage determination in the union and nonunion sectors," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 31(2), pages 183-192, January.
  3. Richard B. Freeman, 1981. "Union Wage Practices and Wage Dispersion within Establishments," NBER Working Papers 0752, National Bureau of Economic Research, Inc.
  4. Thomas Hyclak, 1979. "The effect of unions on earnings inequality in local labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 33(1), pages 77-84, October.
  5. Richard B. Freeman, 1978. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
  6. E.K. Berndt & B.H. Hall & R.E. Hall, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 103-116 National Bureau of Economic Research, Inc.
  7. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
  8. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  9. Katharine G. Abraham & James L. Medoff, 1985. "Length of service and promotions in union and nonunion work groups," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 38(3), pages 408-420, April.
  10. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-24, September.
  11. Blair, Douglas H & Crawford, David L, 1984. "Labor Union Objectives and Collective Bargaining," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 547-66, August.
  12. Barry T. Hirsch, 1982. "The interindustry structure of unionism, earnings, and earnings dispersion," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 36(1), pages 22-39, October.
  13. George J. Borjas, 1979. "Job Satisfaction, Wages, and Unions," Journal of Human Resources, University of Wisconsin Press, vol. 14(1), pages 21-40.
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Citations

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Cited by:
  1. Hart, Robert A. & Ma, Yue, 2013. "Overtime Working and Contract Efficiency," IZA Discussion Papers 7560, Institute for the Study of Labor (IZA).
  2. Carneiro, Anabela & Portugal, Pedro, 2006. "Earnings Losses of Displaced Workers: Evidence from a Matched Employer-Employee Data Set," IZA Discussion Papers 2289, Institute for the Study of Labor (IZA).
  3. Devereux, Paul J & Hart, Robert A & Roberts, J Elizabeth, 2013. "Job spells, employer spells, and wage returns to tenure," Stirling Economics Discussion Papers 2013-01, University of Stirling, Division of Economics.
  4. Givord, Pauline & Maurin, Eric, 2003. "Job Tenure, Wages and Technology: A Reassessment Using Matched Worker-Firm Panel Data," CEPR Discussion Papers 4147, C.E.P.R. Discussion Papers.
  5. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer, vol. 18(4), pages 436-460, August.
  6. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  7. Byron W. Brown & Stephen A. Woodbury, . "Seniority, External Labor Markets, and Faculty Pay," Upjohn Working Papers and Journal Articles bbsaw1999, W.E. Upjohn Institute for Employment Research.
  8. Reich, Michael, 2012. "The Rising Strength of Management, High Unemployment and Slow Growth: Revisiting Okun’s Law," Institute for Research on Labor and Employment, Working Paper Series qt8sc8s1z1, Institute of Industrial Relations, UC Berkeley.
  9. repec:cdl:indrel:qt35g487jh is not listed on IDEAS
  10. Don Mar & Paul Ong, 1994. "Race and rehiring in the high-tech industry," The Review of Black Political Economy, Springer, vol. 22(3), pages 43-54, March.
  11. Williams, Nicolas, 2009. "Seniority, experience, and wages in the UK," Labour Economics, Elsevier, vol. 16(3), pages 272-283, June.
  12. Lorenz, Wilhelm & Wagner, Joachim, 1989. "Tätigkeit im erlernten Beruf, Betriebszugehörigkeitsdauer und Arbeitseinkommen : eine ökonometrische Untersuchung mit Individualdaten für das Bundesland Bremen und ein metallverarbeitendes Unterne," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 22(4), pages 568-575.
  13. repec:hal:journl:halshs-00202293 is not listed on IDEAS

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