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What Effect do Unions Have on Wages Now and Would 'What Do Unions Do' Be Surprised?

  • David G. Blanchflower
  • Alex Bryson

We explore the various claims made by Freeman and Medoff (FM) in their famous book What do unions do? about the impact of unions on wages and update them with new and better data. The main findings are as follows. 1) Private sector union wage premium is lower today than it was in the 1970s. 2) The union wage premium is counter-cyclical. 3) There is evidence of a secular decline in the private sector union wage premium. 4) There remains big variation in the premium across workers. 5) There is big variation in industry-level union wage premia. 6) State level union wage premia vary less than occupation and industry level premia. 7) Union workers remain better able than non-union workers to resist employer efforts to reduce wages when market conditions are unfavorable. 8) There has been a decline in the unadjusted wage gap relative to the regression-adjusted wage gap. 9) Public sector wage effects are large and similar to those in the private sector.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9973.

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Date of creation: Sep 2003
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Publication status: published as Blanchflower, David and Alex Bryson. "What effect do unions have on wages now and would Freeman and Medoff be surprised?" Journal of Labor Research 25, 3 (Summer 2004): 383-414.
Handle: RePEc:nbr:nberwo:9973
Note: LS
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  1. Barry T. Hirsch & Edward J. Schumacher, 1998. "Unions, Wages, and Skills," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 201-219.
  2. Colin Lawrence & Robert Z. Lawrence, 1985. "Manufacturing Wage Dispersion: An End Game Interpretation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(1), pages 47-116.
  3. Bernt Bratsberg & James F. Ragan Jr., 2002. "Changes in the Union Wage Premium by Industry," ILR Review, Cornell University, ILR School, vol. 56(1), pages 65-83, October.
  4. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, October.
  5. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-44, October.
  6. Richard B. Freeman & Casey Ichniowski, 1988. "When Public Sector Workers Unionize," NBER Books, National Bureau of Economic Research, Inc, number free88-1, October.
  7. David Blanchflower, 1996. "The Role and Influence of Trade Unions in the OECD," CEP Discussion Papers dp0310, Centre for Economic Performance, LSE.
  8. Richard B. Freeman & Morris M. Kleiner, 1999. "Do unions make enterprises insolvent?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(4), pages 510-527, July.
  9. Staiger, Robert W, 1988. "Organized Labor and the Scope of International Specialization," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 1022-47, October.
  10. John M. Abowd & Francis Kramarz & David N. Margolis, 1994. "High Wage Workers and High Wage Firms," NBER Working Papers 4917, National Bureau of Economic Research, Inc.
  11. Bernt Bratsberg & James F. Ragan & Jr, 2002. "Changes in the union wage premium by industry," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(1), pages 65-83, October.
  12. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
  13. Richard B. Freeman & Karen Needels, 1993. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 45-68 National Bureau of Economic Research, Inc.
  14. Henry S. Farber, 2001. "Notes on the Economics of Labor Unions," Working Papers 831, Princeton University, Department of Economics, Industrial Relations Section..
  15. 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.
  16. Hirsch, Barry, 2003. "Reconsidering Union Wage Effects: Surveying New Evidence on an Old Topic," IZA Discussion Papers 795, Institute for the Study of Labor (IZA).
  17. Richard J. Long, 1993. "The impact of unionization on employment growth of Canadian companies," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(4), pages 691-703, July.
  18. C. Jeffrey Waddoups, 2000. "Unions and Wages in Nevada's Hotel-Casino Industry," Journal of Labor Research, Transaction Publishers, vol. 21(2), pages 345-361, April.
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