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Union wage effects in Australia in a period of declining union power: The role of endowments and returns to endowments

Author

Listed:
  • Daehoon Nahm

    (Macquarie University)

  • Michael Dobbie

    (Macquarie University)

  • Craig MacMillan

    (Macquarie University)

Abstract

This study explores the union-non-union wage differentials in Australia, using a quantile regression model and simulation-based counterfactual decomposition. We find that wages for unionists are higher, and more equally distributed, compared to non-unionists. The decomposition analysis reveals that the main reason for a positive union-non-union wage differential is the possession of better labour market endowments by unionists compared with non-unionists. We find that union wages are more equally distributed because endowments of key employment characteristics are more homogenously distributed among unionists. A corollary of this is that differences in the returns to endowments, the ‘pure’ union-non-union wage differentials, are estimated to be small, approximately 0 to 4 per cent for males and 0 to 2 per cent for females.

Suggested Citation

  • Daehoon Nahm & Michael Dobbie & Craig MacMillan, 2022. "Union wage effects in Australia in a period of declining union power: The role of endowments and returns to endowments," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 25(2), pages 148-170.
    • Handle: RePEc:ozl:journl:v:25:y:2022:i:2:p:148-170
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    References listed on IDEAS

    as
    1. Blunch, Niels-Hugo & Verner, Dorte, 2001. "Asymmetries in union relative wage effects in Ghanaian manufacturing - an analysis applying quantile regressions," Policy Research Working Paper Series 2570, The World Bank.
    2. Michael Dobbie & Craig MacMillan & Ian Watson, 2014. "The returns to general experience, job and occupational tenure: a study using Australian panel data," Applied Economics, Taylor & Francis Journals, vol. 46(18), pages 2096-2107, June.
    3. Alex Bryson, 2007. "The Effect of Trade Unions on Wages," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 33-45.
    4. Andrew Hildreth, 1999. "What Has Happened to the Union Wage Differential in Britain in the 1990s?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(1), pages 5-31, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Union wage effects; unobserved heterogeneity; counterfactual decomposition; panel data; HILDA;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J59 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Other

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