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The Wage Impact of Trade Unions in the UK Public and Private Sectors

Author

Listed:
  • Blanchflower, David G.

    () (Dartmouth College)

  • Bryson, Alex

    () (University College London)

Abstract

This paper draws attention to an increase in the size of the union membership wage premium in the UK public sector relative to the private sector. We find the public sector membership wage premium is approximately double that in the private sector controlling for a full range of individual, job and workplace characteristics. Using data from the Labour Force Surveys of 1993-2006 the gap between the membership premium in the public and private sectors closes with the addition of three digit occupational controls, although significant wage premia remain in both sectors. However, using data from the Workplace Employment Relations Survey of 2004, the public sector union membership wage premium remains roughly twice the size of the private sector membership premium having accounted for workplace fixed effects, workers’ occupations, their job characteristics, qualifications and worker demographics. Furthermore, the membership wage premium among workers covered by collective bargaining is only apparent in the public sector.

Suggested Citation

  • Blanchflower, David G. & Bryson, Alex, 2007. "The Wage Impact of Trade Unions in the UK Public and Private Sectors," IZA Discussion Papers 3055, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3055
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    References listed on IDEAS

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    1. 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.
    2. Bryson, Alex & Gomez, Rafael, 2005. "Why have workers stopped joining unions? Accounting for the rise in never-membership in Britain," LSE Research Online Documents on Economics 360, London School of Economics and Political Science, LSE Library.
    3. Henry S. Farber, 2003. "Nonunion Wage Rates and the Threat of Unionization," Working Papers 112, Princeton University, Department of Economics, Center for Economic Policy Studies..
    4. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
    5. Blanchflower, David G & Oswald, Andrew J & Garrett, Mario D, 1990. "Insider Power in Wage Determination," Economica, London School of Economics and Political Science, vol. 57(226), pages 143-170, May.
    6. David G. Blanchflower & Alex Bryson, 2004. "What Effect Do Unions Have on Wages Now and Would Freeman and Medoff Be Surprised?," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 383-414, July.
    7. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    8. repec:pri:cepsud:90farber is not listed on IDEAS
    9. Forth, John & Millward, Neil, 2002. "Union effects on pay levels in Britain," Labour Economics, Elsevier, vol. 9(4), pages 547-561, September.
    10. Henry Farber, 2003. "Nonunion Wage Rates and the Threat of Unionization," NBER Working Papers 9705, National Bureau of Economic Research, Inc.
    11. S. Rosen, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," Review of Economic Studies, Oxford University Press, vol. 36(2), pages 185-196.
    12. John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
    13. Helge Sanner, 2006. "Imperfect goods and labor markets, and the union wage gap," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(1), pages 119-136, February.
    14. David G. Blanchflower, 2007. "International Patterns of Union Membership," British Journal of Industrial Relations, London School of Economics, vol. 45(1), pages 1-28, March.
    15. Freeman, Richard B & Medoff, James L, 1981. "The Impact of the Percentage Organized on Union and Nonunion Wages," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 561-572, November.
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    More about this item

    Keywords

    public and private sectors; wage differentials; trade unions;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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