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What Do (Thousands of) Union Do? Union-Specific Pay Premia and Inequality

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Listed:
  • Derenoncourt, Ellora

    (Princeton University)

  • Gerard, Francois

    (Queen Mary, University of London)

  • Lagos, Lorenzo

    (Brown University)

  • Montialoux, Claire

    (UC Berkeley)

Abstract

We study the role of union heterogeneity in shaping wages and inequality among unionized workers. Using linked employer-employee data from Brazil and job moves across multi-firm unions, we estimate over 4,800 union-specific pay premia. Unions explain 3–4% of earnings variation. While unions raise wages on average, the standard deviation in union effects is large (6-7%). Validating our approach, wages fall in markets with higher vs. lower union premia following a nationwide right-to-work law. Linking premia to detailed data on union attributes, we find that unions with strike activity, collective bargaining agreements, internal competition, and skilled leaders secure higher wages. High-premium unions compress wage gaps by education while the average union exacerbates them. Post right-to-work, however, worker support for high-premium unions falls when between-group bargaining differentials are large. Our findings show that unions are not a monolith—their structure and actions shape their wage effects and, consequently, worker support.

Suggested Citation

  • Derenoncourt, Ellora & Gerard, Francois & Lagos, Lorenzo & Montialoux, Claire, 2025. "What Do (Thousands of) Union Do? Union-Specific Pay Premia and Inequality," IZA Discussion Papers 18065, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18065
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