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Unions, Wages, and Skills

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Author Info
Barry T. Hirsch
Edward J. Schumacher

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Abstract

Prior research has focused on the relationship between union wage premiums and worker skills. A standard result is that premiums are highest for workers with low levels of measured skills, and lowest among workers with high measured skills. Evidence from matched Current Population Survey (CPS) panels for 1989/90-1993/94, for example, produce wage level estimates of union premiums ranging from .23 log points among high school dropouts to .09 among college graduates. Longitudinal estimates controlling for worker-specific abilities, however, are .10 to .13 log points among all education groups, indicating an inverse relationship between measured premarket skill levels and relative union-nonunion unmeasured ability. Direct evidence from the NLSY on union-nonunion differences in AFQT aptitude scores further supports our thesis that union workers with high measured skills have low unmeasured skills, relative to nonunion workers. Also explored are alternative strategies to limit measurement error in the union status variable. Our findings provide support for the thesis that there is substantial homogeneity in union workforces, likely to result from union wage standardization policies, union success in organizing establishments where workers have homogeneous preferences and skills, employer selection on quality, and employee sorting such that few highly-skilled workers are in the union queue.

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Publisher Info
Paper provided by East Carolina University, Department of Economics in its series Working Papers with number 9606.

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Handle: RePEc:wop:eacaec:9606

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Find related papers by JEL classification:
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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  1. Rudy Fichtenbaum, 2006. "Labour market segmentation and union wage gaps," Review of Social Economy, Taylor and Francis Journals, vol. 64(3), pages 387-420, September. [Downloadable!] (restricted)
  2. David Card & Thomas Lemieux & W. Craig Riddell, 2003. "Unionization and Wage Inequality: A Comparative Study of the U.S, the U.K., and Canada," NBER Working Papers 9473, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Edward J. Schumacher, . "What Explains Union Membership Contract Coverage Wage Differentials?," Working Papers 9719, East Carolina University, Department of Economics. [Downloadable!]
  4. David G. Blanchflower & Alex Bryson, 2003. "What Effect do Unions Have on Wages Now and Would 'What Do Unions Do' Be Surprised?," NBER Working Papers 9973, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. 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!]
    Other versions:
  6. Barry T. Hirsch & Edward J. Schumacher, . "Union Wages, Rents, and Skills in Health Care Labor Markets," Working Papers 9603, East Carolina University, Department of Economics. [Downloadable!]
    Other versions:
  7. Barry T. Hirsch & Edward J. Schumacher, 2000. "Private Sector Union Density and the Wage Premium: Past, Present, and Future," Working Papers 0015, East Carolina University, Department of Economics. [Downloadable!]
    Other versions:
  8. Lixin Cai & C. Jeffrey Waddoups, 2008. "Union Wage Effects in Australia: Evidence from Panel Data," CEPR Discussion Papers 585, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  9. Barry T. Hirsch & Edward J. Schumacher, 2000. "“Earnings Imputation and Bias in Wage Gap Estimates,”," Working Papers 0003, East Carolina University, Department of Economics. [Downloadable!]
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This page was last updated on 2009-12-2.


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