Labor Union Effects on Wage Dispersion: Evidence from panel data of Japanese listed companies

In this study, we examined (1) whether unions can reduce wage dispersion, (2) whether the influence of unions has changed over time, and (3) whether the influence of unions differs depending on the ownership structure of firms. By combining three data sources, we created a panel dataset including data for 2004--2015. We found very small changes in union status, partly because our data set only covered a relatively short period. We used the hybrid model to address the data challenge. Our results are summarized as follows: (1) We discovered that labor unions have a role in decreasing wage dispersion based on the results of the between effect. (2) We found that the union effect gradually decreased within the sample period. (3) We discovered that there is substitutability between foreign investors and labor unions, while there is complementary between financial institutional shareholders and labor unions in terms of decreasing wage dispersion. We confirmed (1) and (3) are valid when we employed the endogenous treatment effects model to address the endogeneity problem of the union dummy. This led to the conclusion that the bargaining power of unions depends on differences in corporate governance structure.