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Unionization and Wage Inequality: A Comparative Study of the U.S, the U.K., and Canada

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Author Info
David Card
Thomas Lemieux
W. Craig Riddell

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Abstract

This paper presents a comparative analysis of the link between unionization and wage inequality in the U.S., the U.K., and Canada. Our main motivation is to see whether unionization can account for differences and trends in wage inequality in industrialized countries. We focus on the U.S., the U.K., and Canada because the institutional arrangements governing unionization and collective bargaining are relatively similar in these three countries. The three countries also share large non-union sectors that can be used as a comparison group for the union sector. Using comparable micro data for the last two decades, we find that unions have remarkably similar qualitative impacts in all three countries. In particular, unions tend to systematically reduce wage inequality among men, but have little impact on wage inequality for women. We conclude that unionization helps explain a sizable share of cross-country differences in male wage inequality among the three countries. We also conclude that de-unionization explains a substantial part of the growth in male wage inequality in the U.K. and the U.S. since the early 1980s.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9473.

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Date of creation: Feb 2003
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Handle: RePEc:nbr:nberwo:9473

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Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. David Card & Richard B. Freeman, 1993. "Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States," NBER Books, National Bureau of Economic Research, Inc, number card93-1.
  2. Card, David & Lemieux, Thomas, 1996. "Wage dispersion, returns to skill, and black-white wage differentials," Journal of Econometrics, Elsevier, vol. 74(2), pages 319-361, October. [Downloadable!] (restricted)
    Other versions:
  3. Hirsch, Barry T. & Schumacher, Edward J., 2003. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," IZA Discussion Papers 783, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. 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. [Downloadable!] (restricted)
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  5. Barry T. Hirsch & Edward J. Schumacher, . "Unions, Wages, and Skills," Working Papers 9606, East Carolina University, Department of Economics.
  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. [Downloadable!] (restricted)
  7. Richard B. Freeman, 1997. "Spurts in Union Growth: Defining Moments and Social Processes," NBER Working Papers 6012, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Barry T. Hirsch & David A. Macpherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(2), pages 349-354, January.
  9. Pencavel, John, 2003. "The Surprising Retreat of Union Britain," IZA Discussion Papers 818, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Peter Kuhn, . "Canada and the "OECD Hypothesis": Does Labour Market Inflexibility Explain Canada's High Level of Unemployment?," Canadian International Labour Network Working Papers 10, McMaster University. [Downloadable!]
  11. Richard B. Freeman, 1980. "Unionism and the dispersion of wages," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(1), pages 3-23, October.
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  12. Machin, Stephen, 1997. "The decline of labour market institutions and the rise in wage inequality in Britain," European Economic Review, Elsevier, vol. 41(3-5), pages 647-657, April. [Downloadable!] (restricted)
  13. Richard B. Freeman, 1991. "How Much Has De-Unionisation Contributed to the Rise in Male Earnings Inequality?," NBER Working Papers 3826, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. 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. [Downloadable!] (restricted)
  15. Lemieux, Thomas, 1998. "Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 261-91, April. [Downloadable!] (restricted)
  16. Amanda Gosling & Thomas Lemieux, 2001. "Labour Market Reforms and Changes in Wage Inequality in the United Kingdom and the United States," NBER Working Papers 8413, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October. [Downloadable!]
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  18. Kevin M. Murphy & W. Craig Riddell & Paul M. Romer, 1998. "Wages, Skills, and Technology in the United States and Canada," NBER Working Papers 6638, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  19. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  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 v04084, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  2. Myles, John & Picot, Garnett, 2005. "L'inégalité du revenu et le faible revenu au Canada : une perspective internationale," Direction des études analytiques : documents de recherche 2005240f, Statistics Canada, Direction des études analytiques. [Downloadable!]
  3. Landon, Stuart & Smith, Constance, 2007. "Investment and the exchange rate: Short run and long run aggregate and sector-level estimates," MPRA Paper 9958, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  4. Ilan Tojerow, 2008. "Industry Wage Differential, Rent Sharing and Gender in Belgium," Working Papers DULBEA 08-20.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
    Other versions:
  5. A Charlwood, 2005. "The De-Collectivisation of Pay Setting in Britain 1990-1998: Incidence, Determinants and Impact," CEP Discussion Papers dp0705, Centre for Economic Performance, LSE. [Downloadable!]
  6. Koeniger, Winfried & Leonardi, Marco & Nunziata, Luca, 2004. "Labour Market Institutions and Wage Inequality," IZA Discussion Papers 1291, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Myles, John & Picot, Garnett, 2005. "Income Inequality and Low Income in Canada: an International Perspective," Analytical Studies Branch Research Paper Series 2005240e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  8. Nikutowski, Oliver, 2007. "Accelerated Technological Progress - An Explanation for Wage Dispersion and a Possible Solution to the Productivity Paradox," Discussion Papers in Economics 1925, University of Munich, Department of Economics. [Downloadable!]
  9. Ozan Hatipoglu, 2007. "Inequality and Growth. Where Are We Headed? A Survey," Working Papers 2007/07, Bogazici University, Department of Economics. [Downloadable!]
  10. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U.S. Wage Inequality: Re-Assessing the Revisionists," NBER Working Papers 11627, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Heather Boushey & Christian E. Weller, 2006. "Inequality and Household Economic Hardship in the United States of America," Working Papers 18, United Nations, Department of Economics and Social Affairs. [Downloadable!]
  12. Pascale Petit, 2004. "Effet des syndicats sur les inégalités entre les femmes et les hommes : une revue de la littérature," Cahiers de la Maison des Sciences Economiques v04076, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
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