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Falling Union Membership and Rising Wage Inequality: What's the Connection?

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  • David Card

Abstract

This paper presents new evidence on the effects of changing union membership on trends in wage dispersion in the U.S. labor market. I use data from the mid-1970s and early 1990s to compare union membership rates for workers in different deciles of the wage distribution, and to calculate the effects of shifting unionism on wage inequality. Among men, union rates have fallen for most groups, with larger declines among the lowest-wage workers. I estimate that the decline in unions explains 10-20 percent of the rise in male wage inequality over the past 25 years. Among women, union membership has fallen for low-wage workers but risen for high-wage workers, with little change overall. Shifting union patterns have therefore had little effect on female inequality, and may have actually accentuated the rise in inequality. Economy-wide trends in union membership mask a sharp divergence between the private sector, where unions have been declining, and the public sector, where union membership rates have actually risen for most groups. Calculations by sector suggest that unions have been a significant force in forestalling the rise in wage inequality among public sector workers of both genders.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6520.

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Date of creation: Apr 1998
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Handle: RePEc:nbr:nberwo:6520

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References

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  1. David Card & Thomas Lemieux, 1993. "Wage Dispersion, Returns to Skill, and Black-White Wage Differentials," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 691, Princeton University, Department of Economics, Industrial Relations Section..
  2. Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 9406, Universite de Montreal, Departement de sciences economiques.
  3. David Card & Thomas Lemieux & W. Craig Riddell, 2004. "Unions and Wage Inequality," Journal of Labor Research, Transaction Publishers, Transaction Publishers, vol. 25(4), pages 519-562, October.
  4. repec:fth:coluec:452 is not listed on IDEAS
  5. Blackburn-Mckinley, L. & Bloom, D.E. & Freeman, R.B., 1989. "The Declining Economic Position Of Less-Skilled American Males," Discussion Papers, Columbia University, Department of Economics 1989_41, Columbia University, Department of Economics.
  6. David Card, 1992. "The Effect of Unions on the Distribution of Wages: Redistribution or Relabelling?," NBER Working Papers 4195, National Bureau of Economic Research, Inc.
  7. Richard B. Freeman, 1980. "Unionism and the dispersion of wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(1), pages 3-23, October.
  8. Dale Belman & John S. Heywood & John Lund, 1997. "Public sector earnings and the extent of unionization," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(4), pages 610-628, July.
  9. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, Econometric Society, vol. 64(4), pages 957-79, July.
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Cited by:
  1. Marie Leclair & Pascale Petit, 2004. "Présence syndicale dans les établissements : quel effet sur les inégalités salariales entre les hommes et les femmes ?," Cahiers de la Maison des Sciences Economiques, Université Panthéon-Sorbonne (Paris 1) v04084, Université Panthéon-Sorbonne (Paris 1).
  2. Töngür, Ünal & Elveren, Adem Yavuz, 2014. "Deunionization and pay inequality in OECD Countries: A panel Granger causality approach," Economic Modelling, Elsevier, Elsevier, vol. 38(C), pages 417-425.
  3. Lisandro Abrego & John Whalley, 1999. "The Choice of Structural Model in Trade-Wages Decompositions," CSGR Working papers series 34/99, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
  4. Herzer, Dierk, 2014. "Unions and income inequality: a heterogenous cointegration and causality analysis," Working Paper 146/2014, Helmut Schmidt University, Hamburg.
  5. Frederic L. Pryor, 2004. "Economic Systems of OECD Nations: Impact and Evolution," Papers on Economics and Evolution 2004-14, Philipps University Marburg, Department of Geography.
  6. M. Leclair & P. Petit, 2003. "The Effects of Workplace Union on the Gender Wage Gap," Documents de Travail de la DESE - Working Papers of the DESE, Institut National de la Statistique et des Etudes Economiques, DESE g2003-10, Institut National de la Statistique et des Etudes Economiques, DESE.
  7. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury.
  8. Pryor, Frederic L., 2005. "Market economic systems," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 25-46, March.
  9. Lisandro Abrego & John Whalley, 2002. "Decomposing Wage Inequality Change Using General Equilibrium Models," NBER Working Papers 9184, National Bureau of Economic Research, Inc.
  10. Marie Leclair & Pascale Petit, 2004. "Présence syndicale dans les établissements : quel effet sur les salaires masculins et féminins ?," Économie et Statistique, Programme National Persée, Programme National Persée, vol. 371(1), pages 23-47.
  11. Panos, Georgios & Theodossiou, Ioannis, 2010. "Unionism and Peer-Referencing," Stirling Economics Discussion Papers, University of Stirling, Division of Economics 2010-03, University of Stirling, Division of Economics.
  12. Addison, John T. & Siebert, W. Stanley, 2002. "Changes in Collective Bargaining in the U.K," IZA Discussion Papers 562, Institute for the Study of Labor (IZA).
  13. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(2), pages 705-746, May.
  14. Basak Kus, 2012. "Financialisation and Income Inequality in OECD Nations:1995-2007," The Economic and Social Review, Economic and Social Studies, Economic and Social Studies, vol. 43(4), pages 477-495.
  15. Checchi, Daniele & Visser, Jelle & van de Werfhorst, Herman G., 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).
  16. Irac, D., 2000. "Estimation of a Time Varying NAIRU for France," Working papers, Banque de France 75, Banque de France.
  17. David S. Loughran, 2000. "Does Variance Matter? The Effect of Rising Male Inequality on Female Age at First Marriage," Working Papers, RAND Corporation Publications Department 00-12, RAND Corporation Publications Department.
  18. repec:fth:prinin:416 is not listed on IDEAS

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