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Estimation and Testing of the Union Wage Effect Using Panel Data

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  • George Jakubson

Abstract

We present estimates of the union wage effect controlling for unmeasured individual effects, and subject the conventional fixed-effects model to specification tests. For PSID men the union wage effect is 5-8% after controlling for person effects, as opposed to 20% in cross-section. Omnibus tests based on an unrestricted reduced form and instrumental variables tests based on differencing are consistent with conventional models. Tests based on comparing those who enter and leave union coverage provide evidence against the usual model. We find evidence for interactions between union status and other variables even after controlling for person effects.

Suggested Citation

  • George Jakubson, 1991. "Estimation and Testing of the Union Wage Effect Using Panel Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(5), pages 971-991.
    • Handle: RePEc:oup:restud:v:58:y:1991:i:5:p:971-991.
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