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Union Wage Effects in Australia: Evidence from Panel Data

  • Lixin Cai
  • C. Jeffrey Waddoups

Using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, our research indicates that unobserved heterogeneity substantially biases cross-sectional estimates of union wage effects upward for both males and females. Estimates of the union wage premium for male workers between the ages of 25 and 64 fall from 8.7 percent to 5.2 percent after controlling for unobserved heterogeneity. For females aged 25 to 63 the estimated 4.0 percent cross-sectional union wage premium falls to 1.9 once unobserved heterogeneity is controlled for. Our results also indicate positive sorting by unobserved skills into union membership, especially among low skilled male and female workers. There is also evidence of negative sorting into unions among the most highly skilled.

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Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 585.

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Date of creation: Aug 2008
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Handle: RePEc:auu:dpaper:585
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  12. Andrews, Martyn J. & Stewart, Mark B. & Swaffield, Joanna K. & Upward, Richard, 1998. "The estimation of union wage differentials and the impact of methodological choices," Labour Economics, Elsevier, vol. 5(4), pages 449-474, December.
  13. Lixin Cai & C. Jeffrey Waddoups, 2009. "The Role of Unobserved Heterogeneity and On-the-Job Training in the Employer Size-Wage Effect: Evidence from Australia," Working Papers 0915, University of Nevada, Las Vegas , Department of Economics.
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  17. Swaffield, Joanna K, 2001. " Does Measurement Error Bias Fixed-Effects Estimates of the Union Wage Effect?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 437-57, September.
  18. Mark Wooden, 2000. "Union Wage Effects in the Presence of Enterprise Bargaining," Melbourne Institute Working Paper Series wp2000n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
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  21. Lixin Cai & Amy Y.C. Liu, 2008. "Union Wage Effects in Australia: Is There Variation along the Distribution?," The Economic Record, The Economic Society of Australia, vol. 84(267), pages 496-510, December.
  22. Rae Cooper & Bradon Ellem, 2008. "The Neoliberal State, Trade Unions and Collective Bargaining in Australia," British Journal of Industrial Relations, London School of Economics, vol. 46(3), pages 532-554, 09.
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