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Asymmetries in union relative wage effects in Ghanaian manufacturing - an analysis applying quantile regressions

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  • Blunch, Niels-Hugo
  • Verner, Dorte

Abstract

The authors analyze the determinants of earnings in Ghanaian manufacturing, focusing on the impact of unions in terms of the"union relative wage effect", and the possible asymmetries of this effect across the earnings distribution. They find evidence of a union relative wage effect occurring through two distinct channels. First, there is a direct effect through individual union membership, the standard"union premium", well known from the empirical literature on unions. Second, there is a spillover effect to non-union members. The authors also find evidence of an additional union effect, that comes through firm-specific training. They confirm their conjecture that there is an asymmetry in the union relative wage effect: unions benefit mainly at the lower end of the wage distribution. This finding is in line with earlier research, which generally finds that unions reduce income inequality, and wage discrimination. An evaluation of the non-union sub-sample, using the estimated union wage structure, confirms the presence of structural differences between the union, and non-union segments of Ghanaian manufacturing: for given characteristics, a worker in the union sector earns more than a worker in the non-union sector.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2570.

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Date of creation: 31 Mar 2001
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Handle: RePEc:wbk:wbrwps:2570

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Keywords: Geographical Information Systems; Environmental Economics&Policies; Labor Management and Relations; Health Monitoring&Evaluation; Economic Theory&Research;

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  1. Maloney, William F. & Pontual Ribeiro, Eduardo, 1999. "Efficiency wage and union effects in labor demand and wage structure in Mexico - An application of quantile analysis," Policy Research Working Paper Series 2131, The World Bank.
  2. Horton, Susan & Kanbur, Ravi & Mazumdar, Dipak, 1991. "Labor markets in an era of adjustment : an overview," Policy Research Working Paper Series 694, The World Bank.
  3. Booth, Alison L & Francesconi, Marco & Zoega, Gylfi, 1999. "Training, Rent-Sharing and Unions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2200, C.E.P.R. Discussion Papers.
  4. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 33-50, January.
  5. Standing, Guy, 1992. "Do Unions Impede or Accelerate Structural Adjustment? Industrial versus Company Unions in an Industrialising Labour Market," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 16(3), pages 327-54, September.
  6. Rama, Martin, 1998. "Wage misalignment in CFA countries: are labor market policies to blame?," Policy Research Working Paper Series 1873, The World Bank.
  7. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
  8. Buchinsky, Moshe, 1995. "Estimating the asymptotic covariance matrix for quantile regression models a Monte Carlo study," Journal of Econometrics, Elsevier, Elsevier, vol. 68(2), pages 303-338, August.
  9. Booth, Alison L & Chatterji, Monojit, 1998. "Unions and Efficient Training," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(447), pages 328-43, March.
  10. T. Paul Schultz & Germano Mwabu, 1998. "Labor unions and the distribution of wages and employment in South Africa," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(4), pages 680-703, July.
  11. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 474-75, June.
  12. Velenchik, A.D., 1995. "Government Intervention, Efficiency Wages, and the Employer-Size Wage Effects in Zimbabwe," Papers, Wellesley College - Department of Economics 95-09, Wellesley College - Department of Economics.
  13. Pencavel, John, 1995. "The role of labor unions in fostering economic development," Policy Research Working Paper Series 1469, The World Bank.
  14. Panagides, Alexis & Patrinos, Harry Anthony & DEC, 1994. "Union - nonunion wage differentials in the developing world : a case study of Mexico," Policy Research Working Paper Series 1269, The World Bank.
  15. Nelson, Joan M, 1991. "Organized Labor, Politics, and Labor Market Flexibility in Developing Countries," World Bank Research Observer, World Bank Group, World Bank Group, vol. 6(1), pages 37-56, January.
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