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Union Wage Effects in Australia: Evidence from Panel Data

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Author Info
Lixin Cai () (The Institute of Applied Economic and Social Research, University of Melbourne)
C. Jeffrey Waddoups (Department of Economics, University of Nevada, Las Vegas)

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Abstract

Using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, our research indicates that unobserved heterogeneity substantially biases cross-sectional estimates of union wage effects upward for both males and females. Estimates of the union wage premium for male workers between the ages of 25 and 64 fall from 8.7% to 5.2% after controlling for unobserved heterogeneity. For females age 25 to 63 the estimated 4.0% cross-sectional union wage premium falls to 1.9% once unobserved heterogeneity is controlled for. Our results also indicate positive sorting by unobserved skills into union membership, especially among low skilled male and female workers. There is also evidence of negative sorting into unions among the most highly skilled.

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File URL: http://www.unlv.edu/projects/RePEc/pdf/0914.pdf
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Publisher Info
Paper provided by University of Nevada, Las Vegas , Department of Economics in its series Working Papers with number 0914.

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Length: 36 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:nlv:wpaper:0914

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Related research
Keywords: union wage effects; fixed effects models; panel data JEL codes: JEL: J31; J51;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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  1. Alison Booth & Margi Wood, 2004. "Back-to-front Down-under? Part-time/Full-time Wage Differentials in Australia," CEPR Discussion Papers 482, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  2. Green, Francis & Machin, Stephen & Manning, Alan, 1996. "The Employer Size-Wage Effect: Can Dynamic Monopsony Provide an Explanation?," Oxford Economic Papers, Oxford University Press, vol. 48(3), pages 433-55, July. [Downloadable!] (restricted)
  3. Harry C. Katz, 1993. "The decentralization of collective bargaining: A literature review and comparative analysis," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(1), pages 3-22, October.
  4. Mark Wooden & Nicole Watson, 2007. "The HILDA Survey and its Contribution to Economic and Social Research (So Far)," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 208-231, 06. [Downloadable!] (restricted)
  5. Barry T. Hirsch & Edward J. Schumacher, . "Unions, Wages, and Skills," Working Papers 9606, East Carolina University, Department of Economics.
  6. Andrews, Martyn J. & Stewart, Mark B. & Swaffield, Joanna K. & Upward, Richard, 1998. "The estimation of union wage differentials and the impact of methodological choices," Labour Economics, Elsevier, vol. 5(4), pages 449-474, December. [Downloadable!] (restricted)
  7. Wooden, Mark, 2001. "Union Wage Effects in the Presence of Enterprise Bargaining," The Economic Record, The Economic Society of Australia, vol. 77(236), pages 1-18, March. [Downloadable!] (restricted)
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  8. 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.
    Other versions:
  9. Miller, Paul & Mulvey, Charles, 1993. "What Do Australians Unions Do?," The Economic Record, The Economic Society of Australia, vol. 69(206), pages 315-42, September.
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  10. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. 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)
  12. Mellow, Wesley S, 1981. "Unionism and Wages: A Longitudinal Analysis," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 43-52, February. [Downloadable!] (restricted)
  13. Joan R. Rodgers, 2004. "Hourly Wages of full-time and part-time employees in Australia," Australian Journal of Labour Economics (AJLE), The Centre for Labour Market Research (CLMR), Curtin Business School, vol. 7(2), pages 231-254, June.
  14. Rae Cooper & Bradon Ellem, 2008. "The Neoliberal State, Trade Unions and Collective Bargaining in Australia," British Journal of Industrial Relations, Blackwell Publishers Ltd/London School of Economics, vol. 46(3), pages 532-554, 09. [Downloadable!] (restricted)
  15. Robinson, Chris, 1989. "The Joint Determination of Union Status and Union Wage Effects: Some Tests of Alternative Models," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 639-67, June. [Downloadable!] (restricted)
  16. Lixin Cai & Amy Y.C. Liu, 2008. "Union Wage Effects in Australia: Is There Variation along the Distribution?," The Economic Record, The Economic Society of Australia, vol. 84(267), pages 496-510, December. [Downloadable!] (restricted)
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