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Comparisons Between Public and Private Sector Union Wage Differentials: Does the Legal Environment Matter?

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  • Joseph Tracy

Abstract

A stylized fact in the growing literature on public sector labor markets is that estimates of public sector union wage premia are significantly lower than estimates of private sector union wage premia. In this paper I investigate the hypothesis that this difference may in part be due to the differing legal environments in which public and private sector unions operate. Using data from the Current Population Survey and the Census of Population, I find that public sector union wage differentials increase significantly with the degree of legal protection afforded to the union in bargaining. However, the estimated public sector union wage premia when no legal controls are included in the specification are close to the estimated premia under the strongest legal environment. Consequently, while controlling for the legal environment in the public Sector is important, it may not reconcile the differences between estimated public and private sector union wage premia.

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  • Joseph Tracy, 1988. "Comparisons Between Public and Private Sector Union Wage Differentials: Does the Legal Environment Matter?," NBER Working Papers 2755, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2755
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    1. Casey Ichniowski, 1988. "Public Sector Union Growth and Bargaining Laws : A Proportional Hazards Approach with Time-Varying Treatments," NBER Chapters,in: When Public Sector Workers Unionize, pages 19-40 National Bureau of Economic Research, Inc.
    2. William M. Landes, 1968. "The Economics of Fair Employment Laws," Journal of Political Economy, University of Chicago Press, vol. 76, pages 507-507.
    3. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 239-253.
    4. Robinson, Chris & Tomes, Nigel, 1984. "Union Wage Differentials in the Public and Private Sectors: A Simultaneous Equations Specification," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 106-127, January.
    5. Ehrenberg, Ronald G. & Schwarz, Joshua L., 1987. "Public-sector labor markets," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 22, pages 1219-1260 Elsevier.
    6. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    7. David T. Ellwood & Glenn A. Fine, 1983. "The Impact of Right-to-Work Laws on Union Organizing," NBER Working Papers 1116, National Bureau of Economic Research, Inc.
    8. Henry S. Farber, 1983. "Right-to-Work Laws and the Extent of Unionization," NBER Working Papers 1136, National Bureau of Economic Research, Inc.
    9. Farber, Henry S, 1984. "Right-to-Work Laws and the Extent of Unionization," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 319-352, July.
    10. Lumsden, Keith G & Petersen, Craig H, 1975. "The Effect of Right-to-Work Laws on Unionization in the United States," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1237-1248, December.
    11. Richard B. Freeman & Robert G. Valletta, 1987. "The Effect of Public Sector Labor laws on Collective Bargaining, Wages, and Employment," NBER Working Papers 2284, National Bureau of Economic Research, Inc.
    12. Breusch, Trevor S & Mizon, Grayham E & Schmidt, Peter, 1989. "Efficient Estimation Using Panel Data," Econometrica, Econometric Society, vol. 57(3), pages 695-700, May.
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    Cited by:

    1. repec:eee:labchp:v:3:y:1999:i:pc:p:3573-3630 is not listed on IDEAS
    2. Anne Lauringson, 2010. "Measuring Union Bargaining Power In The Estonian Public Sector," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 72, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    3. Holtz-Eakin, Douglas & Rosen, Harvey S, 1991. "Municipal Labor Demand in the Presence of Uncertainty: An Econometric Approach," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 276-293, July.

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