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What Do (Thousands of) Unions Do? Union-Specific Pay Premia and Inequality

Author

Listed:
  • Ellora Derenoncourt
  • François Gerard
  • Lorenzo Lagos
  • Claire Montialoux

Abstract

We study the role of union heterogeneity in shaping wages and inequality among unionized workers. Using linked employer-employee data from Brazil and job moves across multi-firm unions, we estimate over 4,800 union-specific pay premia. Unions explain 3–4% of earnings variation. While unions raise wages on average, the standard deviation in union effects is large (6–7%). Validating our approach, wages fall in markets with higher vs. lower union premia following a nationwide right-to-work law. Linking premia to detailed data on union attributes, we find that unions with strike activity, collective bargaining agreements, internal competition, and skilled leaders secure higher wages. High-premium unions compress wage gaps by education while the average union exacerbates them. Post right-to-work, however, worker support for high-premium unions falls when between-group bargaining differentials are large. Our findings show that unions are not a monolith—their structure and actions shape their wage effects and, consequently, worker support.

Suggested Citation

  • Ellora Derenoncourt & François Gerard & Lorenzo Lagos & Claire Montialoux, 2025. "What Do (Thousands of) Unions Do? Union-Specific Pay Premia and Inequality," NBER Working Papers 34139, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34139
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    More about this item

    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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