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Union Wage Effect: New Evidence From Matched Employer-Employee Data

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  • Changhui Kang

    ()
    (National University of Singapore)

Abstract

This paper estimates a union wage effect, using matched employer- employee data and estimation models that control an association between a worker's union status and an employer's characteristics. Failure to control this association may cause previous studies' estimates of the union wage effect to be biased. As long as a worker is more likely to become a union worker in a firm that offers her a higher potential for better pay, the union status is (positively) associated with employer characteristics. The empirical finding of this paper verifies this possibility. Estimates of the union wage effect are shown to be upward-biased in the estimation models without control of the employer characteristics. The estimated union wage effect of this study (in an approximate range of 0.2"3.2 percent) is less than a quarter of cross-sectional estimates, and half of individual panel estimates with unobservable person effects.

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Bibliographic Info

Paper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0302.

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Length: 36 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:nus:nusewp:wp0302

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Web page: http://www.fas.nus.edu.sg/ecs/index.html
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Keywords: Union; Wage; Endogeneity; Person Effect; Firm Effect;

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References

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  1. John M. Abowd & Francis Kramarz & David N. Margolis, 1994. "High Wage Workers and High Wage Firms," NBER Working Papers 4917, National Bureau of Economic Research, Inc.
  2. Even, W.E. & Macpherson, D.A., 1992. "Employer Size and Compensation: The Role of Worker Characteristics," Working Papers 1992_09_5, Department of Economics, Florida State University.
  3. John M. Abowd & Henry S. Farber, 1982. "Job queues and the union status of workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
  4. 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.
  5. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  6. Chowdhury, Gopa & Nickell, Stephen, 1985. "Hourly Earnings in the United States: Another Look at Unionization, Schooling, Sickness, and Unemployment Using PSID Data," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 38-69, January.
  7. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
  8. Abowd, John M. & Kramarz, Francis, 1999. "Econometric analyses of linked employer-employee data," Labour Economics, Elsevier, vol. 6(1), pages 53-74, March.
  9. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-59, October.
  10. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
  11. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
  12. Jakubson, George, 1991. "Estimation and Testing of the Union Wage Effect Using Panel Data," Review of Economic Studies, Wiley Blackwell, vol. 58(5), pages 971-91, October.
  13. Bramley, Donald G. & Wunnava, Phanindra V. & Robinson, Michael D., 1989. "A note on union-non-union benefit differentials and size of establishment," Economics Letters, Elsevier, vol. 30(1), pages 85-88.
  14. Stewart, Mark B, 1990. "Union Wage Differentials, Product Market Influences and the Division of Rents," Economic Journal, Royal Economic Society, vol. 100(403), pages 1122-37, December.
  15. 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.
  16. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, vol. 70(3), pages 355-71, June.
  17. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-33, June.
  18. Robinson, Chris & Tomes, Nigel, 1984. "Union Wage Differentials in the Public and Private Sectors: A Simultaneous Equations Specification," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 106-27, January.
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