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Changes Over Time in Union Relative Wage Effects in Great Britain and the United States

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  • David G. Blanchflower

Abstract

This paper uses broadly comparable micro data at the level of the individual to examine the extent to which union relative wage effects vary across groups and through time. The main findings may be summarized as follows. a) The union wage gap averages 15% in the US and 10% in Great Britain. b) The gap is positively correlated with the (lagged) unemployment rate, and appears to be untrended in both countries. Union wages are sticky. c) The size of the wage gap varies across groups. In both the US and Great Britain the differential is relatively high in the private sector, in non-manufacturing, for manuals, the young and the least educated. d) In the US there are no differences by race or gender in the size of the differential. In Great Britain it is higher both for women and non-whites. The fact that the differential has remained more or less constant in both Great Britain and the US is a puzzle, particularly given the rapid declines in union membership in both countries. The evidence does not appear to be consistent with the widely held view that union power has been emasculated.

Suggested Citation

  • David G. Blanchflower, 1997. "Changes Over Time in Union Relative Wage Effects in Great Britain and the United States," NBER Working Papers 6100, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6100
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    References listed on IDEAS

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    1. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, March.
    2. Metcalf, David & Stewart, Mark, 1992. "Closed Shops and Relative Pay: Institutional Arrangements or High Density?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(4), pages 503-516, November.
    3. Blackaby, D. H. & Murphy, P. D. & Sloane, P. J., 1991. "Union membership, collective bargaining coverage and the trade union mark-up for Britain," Economics Letters, Elsevier, vol. 36(2), pages 203-208, June.
    4. Schmidt, Christoph M, 1994. "Relative Wage Effects of German Unions," CEPR Discussion Papers 918, C.E.P.R. Discussion Papers.
    5. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
    6. Stewart, Mark B, 1983. "Relative Earnings and Individual Union Membership in the United Kingdom," Economica, London School of Economics and Political Science, vol. 50(198), pages 111-125, May.
    7. Blanchflower, David G & Oswald, Andrew J, 1990. "The Determination of White-Collar Pay," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 356-378, April.
    8. Green, Francis, 1988. "The trade union wage gap in Britain: Some new estimates," Economics Letters, Elsevier, vol. 27(2), pages 183-187.
    9. Stewart, Mark B, 1995. "Union Wage Differentials in an Era of Declining Unionization," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 143-166, May.
    10. David Blanchflower & Stephen Machin, 1996. "Product Market Competition Wages and Productivity: International Evidence from Establishment-Level Data," Annals of Economics and Statistics, GENES, issue 41-42, pages 219-253.
    11. Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-710, November.
    12. Blanchflower, David G, 1991. "Fear, Unemployment and Pay Flexibility," Economic Journal, Royal Economic Society, vol. 101(406), pages 483-496, May.
    13. P. G. Moll, 1993. "Black South African Unions: Relative Wage Effects in International Perspective," ILR Review, Cornell University, ILR School, vol. 46(2), pages 245-261, January.
    14. Stewart, Mark B, 1987. "Collective Bargaining Arrangements, Closed Shops and Relative Pay," Economic Journal, Royal Economic Society, vol. 97(385), pages 140-156, March.
    15. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1995. "A Comparison of Changes in the Structure of Wages in Four OECD Countries," NBER Chapters,in: Differences and Changes in Wage Structures, pages 25-66 National Bureau of Economic Research, Inc.
    16. Wayne Simpson, 1985. "The Impact of Unions on the Structure of Canadian Wages: An Empirical Analysis with Microdata," Canadian Journal of Economics, Canadian Economics Association, vol. 18(1), pages 164-181, February.
    17. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc.
    18. David G. Blanchflower & Richard B. Freeman, 1993. "Did the Thatcher Reforms Change British Labour Performance?," NBER Working Papers 4384, National Bureau of Economic Research, Inc.
    19. repec:adr:anecst:y:1996:i:41-42:p:11 is not listed on IDEAS
    20. Stephen B. Jarrell & T. D. Stanley, 1990. "A Meta-Analysis of the Union-Nonunion Wage Gap," ILR Review, Cornell University, ILR School, vol. 44(1), pages 54-67, October.
    21. Main, Brian G M & Reilly, Barry, 1992. "Women and the Union Wage Gap," Economic Journal, Royal Economic Society, vol. 102(410), pages 49-66, January.
    22. Main, Brian G M & Reilly, Barry, 1993. "The Employer Size-Wage Gap: Evidence for Britain," Economica, London School of Economics and Political Science, vol. 60(238), pages 125-142, May.
    23. Wagner, Joachim, 1990. "Gewerkschaftsmitgliedschaft und Arbeitseinkommen in der Bundesrepublik Deutschland. Eine ökonometrische Analyse mit Individualdaten," Hannover Economic Papers (HEP) dp-155, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    24. E. Kenneth Grant & Robert Swidinsky & John Vanderkamp, 1987. "Canadian Union-Nonunion Wage Differentials," ILR Review, Cornell University, ILR School, vol. 41(1), pages 93-107, October.
    25. Ingram, Peter N, 1991. "Ten Years of Manufacturing Wage Settlements: 1979-89," Oxford Review of Economic Policy, Oxford University Press, vol. 7(1), pages 93-106, Spring.
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    1. repec:eee:labchp:v:3:y:1999:i:pb:p:2215-2288 is not listed on IDEAS
    2. David Blanchflower & Alex Bryson, 2004. "The Union Wage Premium in the US and the UK," CEP Discussion Papers dp0612, Centre for Economic Performance, LSE.
    3. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    4. Barry T. Hirsch & Edward J. Schumacher, 2004. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 689-722, July.
    5. Geeta Gandhi Kingdon & John Knight, 2006. "How Flexible are Wages in Response to Local Unemployment in South Africa?," ILR Review, Cornell University, ILR School, vol. 59(3), pages 471-495, April.

    More about this item

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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