IDEAS home Printed from https://ideas.repec.org/a/sae/ilrrev/v58y2005i3p335-352.html

Nonunion Wage Rates and the Threat of Unionization

Author

Listed:
  • Henrys Farber

Abstract

Using CPS data for 1977–2002, the author investigates the extent to which the threat of union organization increases nonunion wages and reduces the union/nonunion wage differential. The results are mixed. Estimates employing the predicted probability of union membership as a measure of the union threat show no important link between the union threat and either nonunion wages or the union wage gap. Estimates focusing on two states' introduction of right-to-work laws, which arguably affect the threat of union organization independently of changes in labor demand, show that in one state the law was associated with a statistically significant drop in nonunion wages. Finally, an analysis of wage data for three industries that underwent deregulation—another natural experiment in which labor demand changes are unlikely to have been a complicating factor—yields stronger evidence of threat effects on nonunion wages than do either of the other two analyses.

Suggested Citation

  • Henrys Farber, 2005. "Nonunion Wage Rates and the Threat of Unionization," ILR Review, Cornell University, ILR School, vol. 58(3), pages 335-352, April.
    • Handle: RePEc:sae:ilrrev:v:58:y:2005:i:3:p:335-352
    DOI: 10.1177/001979390505800302
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/001979390505800302
    Download Restriction: no
    File URL: https://libkey.io/10.1177/001979390505800302?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lazear, Edward P, 1983. "A Competitive Theory of Monopoly Unionism," American Economic Review, American Economic Association, vol. 73(4), pages 631-643, September.
    2. O. C. Ashenfelter & G. E. Johnson & J. H. Pencavel, 1972. "Trade Unions and the Rate of Change of Money Wages in United States Manufacturing Industry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 39(1), pages 27-54.
    3. David Card, 2001. "The Effect of Unions on Wage Inequality in the U.S. Labor Market," ILR Review, Cornell University, ILR School, vol. 54(2), pages 296-315, January.
    4. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    5. Farber, Henry S, 1983. "The Determination of the Union Status of Workers," Econometrica, Econometric Society, vol. 51(5), pages 1417-1437, September.
    6. Farber, Henry S, 1984. "Right-to-Work Laws and the Extent of Unionization," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 319-352, July.
    7. S. Rosen, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(2), pages 185-196.
    8. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-979, July.
    9. John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
    10. Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-1178, December.
    11. Henry S. Farber & Bruce Western, 2002. "Ronald Reagan and the Politics of Declining Union Organization," British Journal of Industrial Relations, London School of Economics, vol. 40(3), pages 385-401, September.
    12. Freeman, Richard B & Medoff, James L, 1981. "The Impact of the Percentage Organized on Union and Nonunion Wages," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 561-572, November.
    13. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Freeman, Richard Barry & Han, Eunice & Madland, David & Duke, Brendan, 2016. "How Does Declining Unionism Affect the American Middle Class and Intergenerational Mobility?," Scholarly Articles 27304672, Harvard University Department of Economics.
    2. James Bishop & Iris Chan, 2019. "Is Declining Union Membership Contributing to Low Wages Growth?," RBA Annual Conference Papers acp2019-06, Reserve Bank of Australia.
    3. repec:pri:indrel:dsp01gb19f581g is not listed on IDEAS
    4. Telegdy, Álmos, 2018. "Public wage spillovers: The role of individual characteristics and employer wage policies," Labour Economics, Elsevier, vol. 55(C), pages 116-129.
    5. Adam Seth Litwin & Or Shay, 2022. "What do unions do… for temps? Collective bargaining and the wage penalty," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(2), pages 193-227, April.
    6. Woods, Keegan & Tan, Kelvin Jui Keng & Faff, Robert, 2019. "Labor unions and corporate financial leverage: The bargaining device versus crowding-out hypotheses," Journal of Financial Intermediation, Elsevier, vol. 37(C), pages 28-44.
    7. Alex Bryson, 2014. "Union wage effects," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-35, July.
    8. Francine D. Blau & Lawrence M. Kahn, 2006. "The U.S. Gender Pay Gap in the 1990S: Slowing Convergence," ILR Review, Cornell University, ILR School, vol. 60(1), pages 45-66, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:eee:labchp:v:2:y:1986:i:c:p:1039-1089 is not listed on IDEAS
    2. Açıkgöz, Ömer Tuğrul & Kaymak, Barış, 2014. "The rising skill premium and deunionization," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 37-50.
    3. 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.
    4. Baris Kaymak & Omer Acikgoz, 2011. "The Rising Skill Premium and Deunionization in the United States," 2011 Meeting Papers 1433, Society for Economic Dynamics.
    5. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
    6. Henry S. Farber, 2001. "Notes on the Economics of Labor Unions," Working Papers 831, Princeton University, Department of Economics, Industrial Relations Section..
    7. Henry S. Farber, 1984. "The Analysis of Union Behavior," NBER Working Papers 1502, National Bureau of Economic Research, Inc.
    8. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370, Elsevier.
    9. Henry S. Farber, 2001. "Notes on the Economics of Labor Unions," Working Papers 831, Princeton University, Department of Economics, Industrial Relations Section..
    10. Cho, DuckKi & Choi, Lyungmae, 2024. "Shadow union in local labor markets and corporate financing policies," Journal of Corporate Finance, Elsevier, vol. 89(C).
    11. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L., 2005. "The Effects of Technical Change on Labor Market Inequalities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 20, pages 1275-1370, Elsevier.
    12. Callaway, Brantly & Collins, William J., 2018. "Unions, workers, and wages at the peak of the American labor movement," Explorations in Economic History, Elsevier, vol. 68(C), pages 95-118.
    13. David Fairris, 2003. "Unions and Wage Inequality in Mexico," ILR Review, Cornell University, ILR School, vol. 56(3), pages 481-497, April.
    14. David Card, 2001. "The Effect of Unions on Wage Inequality in the U.S. Labor Market," ILR Review, Cornell University, ILR School, vol. 54(2), pages 296-315, January.
    15. Meszaros, John, 2018. "Inequality and unionization within the United States," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 326-333.
    16. R. Alison Felix & James R. Hines, 2022. "Corporate taxes and union wages in the United States," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(6), pages 1450-1494, December.
    17. Steven Raphael, 2000. "Estimating the Union Earnings Effect Using a Sample of Displaced Workers," ILR Review, Cornell University, ILR School, vol. 53(3), pages 503-521, April.
    18. Maria Guadalupe, 2007. "Product Market Competition, Returns to Skill, and Wage Inequality," Journal of Labor Economics, University of Chicago Press, vol. 25(3), pages 439-474.
    19. Abhir Kulkarni & Barry T. Hirsch, 2021. "Revisiting Union Wage and Job Loss Effects Using the Displaced Worker Surveys," ILR Review, Cornell University, ILR School, vol. 74(4), pages 948-976, August.
    20. Nüß, Patrick, 2025. "Management opposition, strikes and union threat," IWH Discussion Papers 17/2025, Halle Institute for Economic Research (IWH).
    21. Henry S. Farber, 2001. "Notes on the Economics of Labor Unions," Working Papers 2001-5, Princeton University. Economics Department..

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ilrrev:v:58:y:2005:i:3:p:335-352. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ilr.cornell.edu .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.