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Returns to Seniority in the Union and Nonunion Jobs: A New Look at the Evidence

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  • Katharine G. Abraham
  • Henry S. Farber

Abstract

One of the most prominent features of U.S. unionism is the key role played by seniority. However, in cross-sectional data, the positive association between seniority and earnings is typically much stronger for nonunion workers than for union workers. This finding has puzzled previous researchers, since it seems inconsistent with the generalization that seniority is more important in the union sector than in the nonunion sector. We show that standard estimates of the return to seniority are likely to be biased upward and argue that the bias is likely to be larger in the nonunion sector than in the union sector. Corrected estimates imply that the return to seniority is, in fact, larger in the union sector than in the nonunion sector.
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Suggested Citation

  • Katharine G. Abraham & Henry S. Farber, 1987. "Returns to Seniority in the Union and Nonunion Jobs: A New Look at the Evidence," Working papers 458, Massachusetts Institute of Technology (MIT), Department of Economics.
    • Handle: RePEc:mit:worpap:458
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    1. is not listed on IDEAS
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    9. Pedro Portugal & Pedro S. Raposo, 2015. "Decomposing the wage losses of displaced workers: the role of the reallocation of workers into firms and job titles," Working Papers w201511, Banco de Portugal, Economics and Research Department.
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    13. repec:cdl:indrel:qt35g487jh is not listed on IDEAS
    14. Daniel Bird & Alexander Frug, 2019. "Monotone contracts," Economics Working Papers 1647, Department of Economics and Business, Universitat Pompeu Fabra.
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    18. Bhanu Pratap Singh & Akash Yadav & Kailash Chandra Pradhan, 2024. "Decomposing the Certified and Uncertified Skill Wage Gap for Production Workers in India," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 888-916, March.
    19. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
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