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Union Wage Differentials, Product Market Influences and the Division of Rents

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  • Stewart, Mark B

Abstract

This paper examines the extent to which product market conditions limit the ability of trade unions to establish wage differentials over nonunion pay. The mean union pay differential is estimated to be of the order of 8 percent to 10 percent in establishments with some degree of product market power, but zero in establishments facing competitive product market conditions. When competitive conditions are faced, a preentry closed shop and high union coverage of the industry are both required. It is estimated that only 5 percent of the establishments in which there are significant differentials over nonunion pay face generally competitive product market conditions. Copyright 1990 by Royal Economic Society.

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  • Stewart, Mark B, 1990. "Union Wage Differentials, Product Market Influences and the Division of Rents," Economic Journal, Royal Economic Society, vol. 100(403), pages 1122-1137, December.
  • Handle: RePEc:ecj:econjl:v:100:y:1990:i:403:p:1122-37
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    References listed on IDEAS

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    1. Mark B. Stewart, 1983. "On Least Squares Estimation when the Dependent Variable is Grouped," Review of Economic Studies, Oxford University Press, vol. 50(4), pages 737-753.
    2. 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.
    3. Stewart, Mark B, 1987. "Collective Bargaining Arrangements, Closed Shops and Relative Pay," Economic Journal, Royal Economic Society, vol. 97(385), pages 140-156, March.
    4. Connolly, Robert A & Hirsch, Barry T & Hirschey, Mark, 1986. "Union Rent Seeking, Intangible Capital, and Market Value of the Firm," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 567-577, November.
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    7. Stewart, Mark B, 1983. "Relative Earnings and Individual Union Membership in the United Kingdom," Economica, London School of Economics and Political Science, vol. 50(198), pages 111-125, May.
    8. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September.
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