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Union Wage Effects in Australia: Evidence from Panel Data

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  • Lixin Cai
  • C. Jeffrey Waddoups

Abstract

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.

Suggested Citation

  • Lixin Cai & C. Jeffrey Waddoups, 2008. "Union Wage Effects in Australia: Evidence from Panel Data," CEPR Discussion Papers 585, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  • Handle: RePEc:auu:dpaper:585
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    File URL: https://www.cbe.anu.edu.au/researchpapers/cepr/DP585.pdf
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    References listed on IDEAS

    as
    1. Wooden, Mark, 2001. "Union Wage Effects in the Presence of Enterprise Bargaining," The Economic Record, The Economic Society of Australia, vol. 77(236), pages 1-18, March.
    2. Alison L. Booth & Mark L. Bryan, 2004. "The Union Membership Wage-Premium Puzzle: Is There a Free Rider Problem?," ILR Review, Cornell University, ILR School, vol. 57(3), pages 402-421, April.
    3. Barry T. Hirsch & Edward J. Schumacher, 1998. "Unions, Wages, and Skills," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 201-219.
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    5. 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.
    6. Miller, Paul & Mulvey, Charles, 1993. "What Do Australians Unions Do?," The Economic Record, The Economic Society of Australia, vol. 69(206), pages 315-342, September.
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    Cited by:

    1. Walsh, Frank, 2013. "The union wage effect and ability bias: Evidence from Ireland," Economics Letters, Elsevier, vol. 119(3), pages 296-298.
    2. Steve Bradley & Colin Green & John Mangan, 2015. "Gender Wage Gaps within a Public Sector: Evidence from Personnel Data," Manchester School, University of Manchester, vol. 83(4), pages 379-397, July.
    3. Lixin Cai, 2015. "The dynamics of low pay employment in Australia," International Journal of Manpower, Emerald Group Publishing, vol. 36(7), pages 1095-1123, October.
    4. C. Jeffrey Waddoups, 2014. "Union Membership and Job-Related Training: Incidence, Transferability, and Efficacy," British Journal of Industrial Relations, London School of Economics, vol. 52(4), pages 753-778, December.
    5. Alison L. Booth & Pamela Katic, 2011. "Men at Work in a Land Down‐Under: Testing Some Predictions of Human Capital Theory," British Journal of Industrial Relations, London School of Economics, vol. 49(1), pages 1-24, March.
    6. Stéphane Mahuteau & Rong Zhu, 2016. "Crime Victimisation and Subjective Well‐Being: Panel Evidence From Australia," Health Economics, John Wiley & Sons, Ltd., vol. 25(11), pages 1448-1463, November.

    More about this item

    Keywords

    union wage effects; fixed effects models; panel data;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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