The Union Membership Wage Premium: An Analysis Using Propensity Score Matching
This paper estimates the size of the union membership wage premium by comparing wage outcomes for unionised workers with 'matched' non-unionised workers. The method assumes selection on observables. For this identifying assumption to be plausible, one must be able to control for all characteristics affecting both union status and wages. This requires very informative data. We illustrate the value of the rich data offered by the linked employer-employee Workplace Employee Relations Survey (WERS) 1998 in implementing this methodology. We estimate the union membership premium for the whole private sector, among workers in workplaces where at least some workers are covered by collective bargaining, and in occupations with pay set by collective bargaining. We find a raw 17-25% union premium in gross hourly wages for the private sector in Britain, depending on the sub-group used. However, post-matching this difference falls to between 3% and 6%. This indicates that the higher pay of unionised workers is largely accounted for by their better underlying earnings capacity, which is associated with their individual characteristics, the jobs they do and the workplaces they find themselves in.
|Date of creation:||May 2002|
|Date of revision:|
|Contact details of provider:|| Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Metcalf & Kirstine Hansen & Andy Charlwood, 2001. "Unions and the Sword of Justice: Unions and Pay Systems, Pay Inequality, Pay Discrimination and Low Pay," National Institute Economic Review, National Institute of Economic and Social Research, vol. 176(1), pages 61-75, April.
- Henry S. Farber, 2001. "Notes on the Economics of Labor Unions," Working Papers 831, Princeton University, Department of Economics, Industrial Relations Section..
- 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.
- Budd, J.W. & Na, I.G., 1994. "The Union Membership Wage Premium for Employees Covered by Collective Bargaining Agreements," Papers 94-09, Minnesota - Industrial Relations Center.
- Rajeev H. Dehejia & Sadek Wahba, 1998.
"Propensity Score Matching Methods for Non-experimental Causal Studies,"
NBER Working Papers
6829, National Bureau of Economic Research, Inc.
- Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
- Blakemore, Arthur E & Hunt, Janet C & Kiker, B F, 1986. "Collective Bargaining and Union Membership Effects on the Wages of Male Youths," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 193-211, April.
- James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
- Sue Fernie & Helen Gray, 2002.
"Its a Family Affair: the Effect of Union Recognition and Human Resource Management on the Provision of Equal Opportunities in the UK,"
CEP Discussion Papers
dp0525, Centre for Economic Performance, LSE.
- Sue Fernie & Helen Gray, 2002. "It's a family affair: the effect of union recognition and human resource management on the provision of equal opportunities in the UK," LSE Research Online Documents on Economics 20089, London School of Economics and Political Science, LSE Library.
- Blackaby, D. H. & Murphy, P. D. & Sloane, P. J., 1991. "Union membership, collective bargaining coverage and the trade union mark-up for Britain," Economics Letters, Elsevier, vol. 36(2), pages 203-208, June.
When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp0530. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.