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The rising skill premium and deunionization

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  • Açıkgöz, Ömer Tuğrul
  • Kaymak, Barış

Abstract

During the past 50 years, the US economy has seen a rapid decline in labor union membership and a substantial rise in wage inequality. Since labor unions compress wages between skilled and unskilled workers, a rising skill premium encourages skilled workers to withdraw from the union. If this withdrawal is accompanied by a fall in the productivity of unskilled workers, firms become reluctant to hire the relatively expensive union workers, reinforcing the decline in the unionization rate. Evaluating this hypothesis, we find that the rise in the skill premium explains about 40% of the decline in the unionization rate.

Suggested Citation

  • Açıkgöz, Ömer Tuğrul & Kaymak, Barış, 2014. "The rising skill premium and deunionization," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 37-50.
  • Handle: RePEc:eee:moneco:v:63:y:2014:i:c:p:37-50
    DOI: 10.1016/j.jmoneco.2014.01.002
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    Cited by:

    1. Emin Dinlersoz & Jeremy Greenwood & Henry Hyatt, 2014. "Who do Unions Target? Unionization over the Life-Cycle of U.S. Businesses," NBER Working Papers 20151, National Bureau of Economic Research, Inc.
    2. Krusell, Per & Rudanko, Leena, 2016. "Unions in a frictional labor market," Journal of Monetary Economics, Elsevier, vol. 80(C), pages 35-50.
    3. Dinlersoz, Emin & Greenwood, Jeremy, 2016. "The rise and fall of unions in the United States," Journal of Monetary Economics, Elsevier, vol. 83(C), pages 129-146.
    4. Emin Dinlersoz & Jeremy Greenwood & Henry Hyatt, 2017. "What Businesses Attract Unions? Unionization over the Life Cycle of U.S. Establishments," ILR Review, Cornell University, ILR School, vol. 70(3), pages 733-766, May.
    5. repec:kap:iecepo:v:14:y:2017:i:2:d:10.1007_s10368-016-0371-1 is not listed on IDEAS
    6. Samuel Danthine & Markus Poschke & Stephane Auray, 2016. "Understanding Severance Pay Determination: Mandates, Bargaining, and Unions," 2016 Meeting Papers 967, Society for Economic Dynamics.
    7. Simeon Alder & David Lagakos & Lee Ohanian, 2014. "Competitive Pressure and the Decline of the Rust Belt: A Macroeconomic Analysis," NBER Working Papers 20538, National Bureau of Economic Research, Inc.
    8. Auray, Stéphane & Danthine, Samuel & Poschke, Markus, 2014. "Mandated versus Negotiated Severance Pay," IZA Discussion Papers 8422, Institute for the Study of Labor (IZA).

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