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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, 1992. "The Effect of Unions on the Distribution of Wages: Redistribution or Relabelling?," NBER Working Papers 4195, National Bureau of Economic Research, Inc.
  2. 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.
  3. Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Cahiers de recherche 9406, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  4. David Card & Thomas Lemieux, 1993. "Wage Dispersion, Returns to Skill, and Black-White Wage Differentials," NBER Working Papers 4365, National Bureau of Economic Research, Inc.
  5. McKinley L. Blackburn & David E. Bloom & Richard B. Freeman, 1989. "The Declining Economic Position of Less-Skilled American Males," NBER Working Papers 3186, National Bureau of Economic Research, Inc.
  6. 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.
  7. Richard B. Freeman, 1980. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
  8. 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.
  9. repec:fth:coluec:452 is not listed on IDEAS
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Cited by:
  1. 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).
  2. David Card & Thomas Lemieux, 2000. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," NBER Working Papers 7655, National Bureau of Economic Research, Inc.
  3. Pryor, Frederic L., 2005. "Market economic systems," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 25-46, March.
  4. 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 v04084, Université Panthéon-Sorbonne (Paris 1).
  5. 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 g2003-10, Institut National de la Statistique et des Etudes Economiques, DESE.
  6. repec:fth:prinin:416 is not listed on IDEAS
  7. 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).
  8. Lisandro Abrego & John Whalley, 2002. "Decomposing Wage Inequality Change Using General Equilibrium Models," University of Western Ontario, Economic Policy Research Institute Working Papers 20022, University of Western Ontario, Economic Policy Research Institute.
  9. Marie Leclair & Pascale Petit, 2004. "Présence syndicale dans les établissements : quel effet sur les salaires masculins et féminins ?," Économie et Statistique, Programme National Persée, vol. 371(1), pages 23-47.
  10. Lawrence F. Katz & Alan B. Krueger, 1999. "The High-Pressure U.S. Labor Market of the 1990s," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1), pages 1-88.
  11. 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.
  12. David S. Loughran, 2000. "Does Variance Matter? The Effect of Rising Male Inequality on Female Age at First Marriage," Working Papers 00-12, RAND Corporation Publications Department.
  13. Basak Kus, 2012. "Financialisation and Income Inequality in OECD Nations:1995-2007," The Economic and Social Review, Economic and Social Studies, vol. 43(4), pages 477-495.

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