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Labor union effects on wage dispersion: Evidence from panel data of Japanese listed companies

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  • Saito, Takashi
  • Matsuura, Tsukasa
  • Okamoto, Hisashi

Abstract

We examined whether (1) unions can reduce wage dispersion, (2) their influence has changed over time, and (3) their influence differs depending on firms’ ownership structure. Combining three data sources, we created a panel dataset that included data from 2004 to 2015. Partly since our dataset covers a relatively short period, we found very small changes in union status. Thus, a hybrid model was used to address the data challenges. We found that first, the between-effects results show that labor unions play a role in decreasing wage dispersion. Second, the union effect gradually decreased during the sample period. Third, foreign investors (financial institution shareholders) and labor unions are substitutes (complements) in reducing wage dispersion. We confirmed that (1) and (3) were valid after employing an endogenous treatment effects model to address the endogeneity problem of the union dummy. Thus, unions’ bargaining power depends on differences in the corporate governance structure.

Suggested Citation

  • Saito, Takashi & Matsuura, Tsukasa & Okamoto, Hisashi, 2024. "Labor union effects on wage dispersion: Evidence from panel data of Japanese listed companies," Journal of Asian Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:asieco:v:95:y:2024:i:c:s1049007824001362
    DOI: 10.1016/j.asieco.2024.101841
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    More about this item

    Keywords

    Corporate governance; Labor union; Wage dispersion; Institutional complementarity;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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