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The Impact of Workers’ Collective Voice on Union and Nonunion Wages: Theory and Evidence from Japan

Author

Listed:
  • Hiroyuki Nishiyama

    (University of Hyogo)

  • Mina Nakano

    (University of Hyogo)

  • Manabu Furuta

    (Graduate School of Economics, Kobe University)

  • Mizuki Tsuboi

    (University of Hyogo)

Abstract

We examine how workers’ collective voice affects union and nonunion wages both theoretically and empirically. We develop a simple union model with a social insurance system and show that, due to two counteracting forces in bargaining, higher bargaining power raises both union and nonunion wages when ex-ante bargaining power is low but lowers them when it is sufficiently high. Using Japanese household-level data, we document an inverted U-shaped relationship between bargaining power and wages for both groups. Applying entropy balancing, we confirm that union wages are maximized at about 70 percent bargaining power, compared with 44 percent for nonunion wages. Given Japan’s current level of about 25 percent, stronger bargaining power and a rising societal willingness to improve working conditions are likely to benefit union members and also nonunion members once under union coverage.

Suggested Citation

  • Hiroyuki Nishiyama & Mina Nakano & Manabu Furuta & Mizuki Tsuboi, 2026. "The Impact of Workers’ Collective Voice on Union and Nonunion Wages: Theory and Evidence from Japan," Discussion Papers 2605, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:2605
    as

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    References listed on IDEAS

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    Keywords

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    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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