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Wage Determination in the Union and Nonunion Sectors: A Sample Selectivity Approach

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  • Gregory M. Duncan
  • Duane E. Leigh

Abstract

This paper re-examines the question, recently raised in this journal by Bloch and Kuskin, of whether wages are determined differently in the union and nonunion sectors. Whereas Bloch and Kuskin employed ordinary least squares to estimate separate wage equations for the two sectors, this study uses a methodology proposed by Heckman and by Lee to correct for the possibility that wage differences may determine the union status of workers as well as vice versa. The authors find that union status is strongly related to the predicted union-nonunion wage differential, but their evidence nevertheless reinforces Bloch and Kuskin's empirical finding that the union earnings function is less sensitive than the nonunion earnings function to changes in nearly every observable attribute of workers, such as education and experience. The authors also conclude that previous studies using separately estimated union and nonunion wage equations may have understated the success of unions in raising the relative wages of their members.

Suggested Citation

  • Gregory M. Duncan & Duane E. Leigh, 1980. "Wage Determination in the Union and Nonunion Sectors: A Sample Selectivity Approach," ILR Review, Cornell University, ILR School, vol. 34(1), pages 24-34, October.
  • Handle: RePEc:sae:ilrrev:v:34:y:1980:i:1:p:24-34
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    Cited by:

    1. Budd, John W & Na, In-Gang, 2000. "The Union Membership Wage Premium for Employees Covered by Collective Bargaining Agreements," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 783-807, October.
    2. Barry T. Hirsch, 2004. "Reconsidering Union Wage Effects: Surveying New Evidence on an Old Topic," Journal of Labor Research, Transaction Publishers, vol. 25(2), pages 233-266, April.
    3. W. Kip Viscusi, 1986. "Market Incentives for Criminal Behavior," NBER Chapters,in: The Black Youth Employment Crisis, pages 301-351 National Bureau of Economic Research, Inc.
    4. repec:spr:qualqt:v:51:y:2017:i:6:d:10.1007_s11135-016-0409-z is not listed on IDEAS
    5. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, Elsevier.
    6. repec:bdr:bdrcap:2011-12-209-252 is not listed on IDEAS
    7. Galvis-Aponte, Luis Armando, 2011. "Diferenciales salariales por género y región en Colombia : una aproximación con regresión por cuantiles," Chapters,in: Bonilla-Mejía, Leonardo (ed.), Dimensión regional de las desigualdades en Colombia, chapter 6, pages 209-252 Banco de la Republica de Colombia.
    8. Keith Bender, 1997. "Specification issues in the modelling of union status determination," Applied Economics Letters, Taylor & Francis Journals, vol. 4(8), pages 481-485.
    9. Denis Y. Orlov & Evgeniy M. Ozhegov, 2015. "Estimating the Efficiency of Sequels in the Film Industry," HSE Working papers WP BRP 96/EC/2015, National Research University Higher School of Economics.
    10. Salma Ahmed & Pushkar Maitra, 2015. "A Distributional Analysis of the Gender Wage Gap in Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 51(11), pages 1444-1458, November.
    11. Kathy A. Paulson Gjerde, 2002. "The existence of gender-specific promotion standards in the U.S," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(8), pages 447-459.
    12. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    13. repec:iza:izadps:dp1362 is not listed on IDEAS
    14. Denis Y. Orlov & Evgeniy M. Ozhegov, 2016. "Do sequel movies really earn more than non-sequels? Evidence from the US box office," ACEI Working Paper Series AWP-03-2016, Association for Cultural Economics International, revised Apr 2016.
    15. Adamson, Dwight W., 1991. "Labor Unions and Racial Wage Differentials: A Longitudinal Analysis," Economics Staff Papers 232179, South Dakota State University, Department of Economics.
    16. Paula Armstrong & Janca Steenkamp, 2008. "South African Trade Unions: an Overview for 1995 to 2005," Working Papers 10/2008, Stellenbosch University, Department of Economics.
    17. Cihan Bilginsoy, 2013. "Union Wage Gap in the U.S. Construction Sector: 1983–2007," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(3), pages 677-701, July.
    18. Christopher Coombs & Robert Newman & Richard Cebula & Mary White, 2015. "The Bargaining Power of Health Care Unions and Union Wage Premiums for Registered Nurses," Journal of Labor Research, Springer, vol. 36(4), pages 442-461, December.
    19. Edward J. Schumacher, "undated". "What Explains Union Membership Contract Coverage Wage Differentials?," Working Papers 9719, East Carolina University, Department of Economics.
    20. Gyourko, Joseph & Tracy, Joseph, 1988. "An Analysis of Public- and Private-Sector Wages Allowing for Endogenous Choices of Both Government and Union Status," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 229-253, April.
    21. Burak Günalp & Seyit Mümin Cilasun & Elif Öznur Acar, 2013. "Male-Female Labor Market Participation and the Extent of Gender-Based Wage Discrimination in Turkey," Working Papers 2013/15, Turkish Economic Association.
    22. Joseph S. Tracy, 1986. "Seniority Rules and the Gains from Union Organization," NBER Working Papers 2039, National Bureau of Economic Research, Inc.
    23. Shoshana Neuman & Ronald Oaxaca, 2004. "Wage Decompositions with Selectivity-Corrected Wage Equations: A Methodological Note," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(1), pages 3-10, April.
    24. Changhui Kang, 2003. "Union Wage Effect: New Evidence From Matched Employer-Employee Data," Departmental Working Papers wp0302, National University of Singapore, Department of Economics.
    25. Julien Picault, 2013. "Unionization and Labour-market Discrimination: A Closer Look at Non-unionized Workers," LABOUR, CEIS, vol. 27(3), pages 272-287, September.

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