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The Union Effect on Wages in Chile: A Two-Stage Approach Using Panel Data

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  • Óscar Landerretche
  • Nicolás Lillo
  • Esteban Puentes

Abstract

We estimate the wage premium in Chile for the period 2004-2009 following a two-stage procedure that corrects the endogeneity of the union decision process. We find that there is true state dependence in the union decision. The wage premium after controlling for endogeneity is close to 20%. At the same time we find evidence that unions tend to increase more the wages of the low end of the wage distribution. Economic sectors are important in the wage equation but seem less relevant in explaining union membership.The most relevant factor that explain union membership is firm size.

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  • Óscar Landerretche & Nicolás Lillo & Esteban Puentes, 2011. "The Union Effect on Wages in Chile: A Two-Stage Approach Using Panel Data," Working Papers wp332, University of Chile, Department of Economics.
    • Handle: RePEc:udc:wpaper:wp332
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    References listed on IDEAS

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    Cited by:

    1. Jorge Friedman & Nanno Mulder & Sebastián Faúndez & Esteban Pérez Caldentey & Carlos Yévenes & Mario Velásquez & Fernando Baizán & Gerhard Reinecke, 2011. "Openness, Wage Gaps and Unions in Chile: A Micro Econometric Analysis," OECD Trade Policy Papers 134, OECD Publishing.
    2. Fernando Rios-Avila & Barry T. Hirsch, 2014. "Unions, Wage Gaps, and Wage Dispersion: New Evidence from the Americas," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(1), pages 1-27, January.
    3. Héctor Gutiérrez Rufrancos, 2019. "Are There Gains to Joining a Union? Evidence from Mexico," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 676-712, September.

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