IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/1883.html
   My bibliography  Save this paper

Labor Market Segmentation and the Union Wage Premium

Author

Listed:
  • William T. Dickens
  • Kevin Lang

Abstract

Studies of the earnings of union workers have consistently shown that they earn considerably more than nonunion workers. This paper considers whether part of this observed union/nonunion differential is due to unions organizing high paying primary sector jobs. We extend our earlier work on the dual labor market in which we used an unknown regime switching regression to identify two labor market sectors --a high wage primary sector and a low wage secondary sector. Here we estimate a model where worker's wages are determined by one of three wage equations: a union wage equation, a nonunion primary equation or a nonunion secondary equation. If individuals are in the union sector their sector is treated as known. If they are not then their sector is treated as unknown. Parameter estimates for this model suggest that union/nonunion differences are very large for average workers even when comparing union and nonunion primary workers. We continue to find distinct primary and secondary sectors with wage equations similar to those that would be expected from the dual market perspective. Since it appears that union workers may be receiving large wage premiums it seems likely that there is non-price rationing of union jobs. If there is, our finding inprevious papers of non-price rationing of primary sector jobs may have been due only to the rationing of union jobs. We test for the existence of non-price rationing of nonunion primary sector employment in this three sector model and continue to find evidence that at least black workers find it difficult to secure primary sector employment.

Suggested Citation

  • William T. Dickens & Kevin Lang, 1986. "Labor Market Segmentation and the Union Wage Premium," NBER Working Papers 1883, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1883
    Note: LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w1883.pdf
    Download Restriction: no

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alcaraz Carlo & Chiquiar Daniel & Salcedo Alejandrina, 2015. "Informality and Segmentation in the Mexican Labor Market," Working Papers 2015-25, Banco de México.
    2. Rudy Fichtenbaum, 2006. "Labour market segmentation and union wage gaps," Review of Social Economy, Taylor & Francis Journals, vol. 64(3), pages 387-420.
    3. William T. Dickens & Kevin Lang, 1992. "Labor Market Segmentation Theory: Reconsidering the Evidence," NBER Working Papers 4087, National Bureau of Economic Research, Inc.
    4. Assaad, Ragui, 1997. "Kinship ties, social networks, and segmented labor markets: evidence from the construction sector in Egypt," Journal of Development Economics, Elsevier, vol. 52(1), pages 1-30, February.
    5. Irene Brambilla & Rafael Dix-Carneiro & Daniel Lederman & Guido Porto, 2012. "Skills, Exports, and the Wages of Seven Million Latin American Workers," World Bank Economic Review, World Bank Group, vol. 26(1), pages 34-60.
    6. Montgomery, Edward & Shaw, Kathryn, 1997. "Pensions and Wage Premia," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 510-522, July.
    7. LEDUC Kristell & GENEVOIS Anne-Sophie, 2012. "Segmentation du marché du travail - le cas luxembourgeois," LISER Working Paper Series 2012-35, LISER.
    8. Rebitzer, James B & Robinson, Michael D, 1991. "Employer Size and Dual Labor Markets," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 710-715, November.
    9. Kevin Lang & William T. Dickens, 1987. "Neoclassical and Sociological Perspectives on Segmented Labor Markets," NBER Working Papers 2127, National Bureau of Economic Research, Inc.
    10. Marcel Garz, 2013. "Labour Market Segmentation: Standard and Non-Standard Employment in Germany," German Economic Review, Verein für Socialpolitik, vol. 14(3), pages 349-371, August.
    11. Michele Battisti, 2013. "Reassessing Segmentation In The Labour Market: An Application For Italy 1995–2004," Bulletin of Economic Research, Wiley Blackwell, vol. 65, pages 38-55, May.
    12. Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 19-38.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1883. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.