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Union Wage Effects in Australia: Evidence from Panel Data

  • Lixin Cai

    ()

    (The Institute of Applied Economic and Social Research, University of Melbourne)

  • C. Jeffrey Waddoups

    (Department of Economics, University of Nevada, Las Vegas)

Using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, our research indicates that unobserved heterogeneity substantially biases cross-sectional estimates of union wage effects upward for both males and females. Estimates of the union wage premium for male workers between the ages of 25 and 64 fall from 8.7% to 5.2% after controlling for unobserved heterogeneity. For females age 25 to 63 the estimated 4.0% cross-sectional union wage premium falls to 1.9% once unobserved heterogeneity is controlled for. Our results also indicate positive sorting by unobserved skills into union membership, especially among low skilled male and female workers. There is also evidence of negative sorting into unions among the most highly skilled.

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File URL: http://web.unlv.edu/projects/RePEc/pdf/0914.pdf
File Function: First version, 2009
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Paper provided by University of Nevada, Las Vegas , Department of Economics in its series Working Papers with number 0914.

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Length: 36 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:nlv:wpaper:0914
Contact details of provider: Phone: (702) 895-3776
Fax: (702) 895-1354
Web page: http://business.unlv.edu/econ/

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  1. Andrews, Martyn J. & Stewart, Mark B. & Swaffield, Joanna K. & Upward, Richard, 1998. "The estimation of union wage differentials and the impact of methodological choices," Labour Economics, Elsevier, vol. 5(4), pages 449-474, December.
  2. Miller, Paul & Mulvey, Charles, 1992. "What Do Australian Unions Do?," Institute for Research on Labor and Employment, Working Paper Series qt7rk2x5x2, Institute of Industrial Relations, UC Berkeley.
  3. Harry C. Katz, 1993. "The decentralization of collective bargaining: A literature review and comparative analysis," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(1), pages 3-22, October.
  4. Wooden, Mark, 2001. "Union Wage Effects in the Presence of Enterprise Bargaining," The Economic Record, The Economic Society of Australia, vol. 77(236), pages 1-18, March.
  5. 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.
  6. repec:ese:iserwp:2001-09 is not listed on IDEAS
  7. Mark Wooden & Nicole Watson, 2007. "The HILDA Survey and its Contribution to Economic and Social Research (So Far)," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 208-231, 06.
  8. Richard B. Freeman, 1978. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
  9. Mellow, Wesley S, 1981. "Unionism and Wages: A Longitudinal Analysis," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 43-52, February.
  10. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
  11. Booth, Alison L & Bryan, Mark L, 2001. "The Union Membership Wage Premium Puzzle: Is There A Free-Rider Problem?," CEPR Discussion Papers 2879, C.E.P.R. Discussion Papers.
  12. David Blanchflower & Alex Bryson, 2002. "Changes over time in union relative wage effects in the UK and the US revisited," NBER Working Papers 9395, National Bureau of Economic Research, Inc.
  13. Harry C. Katz, 1993. "The Decentralization of Collective Bargaining: A Literature Review and Comparative Analysis," ILR Review, Cornell University, ILR School, vol. 47(1), pages 3-22, October.
  14. Rae Cooper & Bradon Ellem, 2008. "The Neoliberal State, Trade Unions and Collective Bargaining in Australia," British Journal of Industrial Relations, London School of Economics, vol. 46(3), pages 532-554, 09.
  15. Richard B. Freeman, 1983. "Longitudinal Analyses of the Effects of Trade Unions," NBER Working Papers 1207, National Bureau of Economic Research, Inc.
  16. Lixin Cai & C. Jeffrey Waddoups, 2009. "The Role of Unobserved Heterogeneity and On-the-Job Training in the Employer Size-Wage Effect: Evidence from Australia," Working Papers 0915, University of Nevada, Las Vegas , Department of Economics.
  17. Green, Francis & Machin, Stephen & Manning, Alan, 1996. "The Employer Size-Wage Effect: Can Dynamic Monopsony Provide an Explanation?," Oxford Economic Papers, Oxford University Press, vol. 48(3), pages 433-55, July.
  18. Robinson, Chris, 1989. "The Joint Determination of Union Status and Union Wage Effects: Some Tests of Alternative Models," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 639-67, June.
  19. Swaffield, Joanna K, 2001. " Does Measurement Error Bias Fixed-Effects Estimates of the Union Wage Effect?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 437-57, September.
  20. Joan R. Rodgers, 2004. "Hourly Wages of full-time and part-time employees in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 7(2), pages 231-254, June.
  21. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-59, October.
  22. Lixin Cai & Amy Y.C. Liu, 2008. "Union Wage Effects in Australia: Is There Variation along the Distribution?," The Economic Record, The Economic Society of Australia, vol. 84(267), pages 496-510, December.
  23. Barry T. Hirsch & Edward J. Schumacher, . "Unions, Wages, and Skills," Working Papers 9606, East Carolina University, Department of Economics.
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