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Unions, Wages, and Skills

Author

Listed:
  • Barry T. Hirsch
  • Edward J. Schumacher

Abstract

Prior research has focused on the relationship between union wage premiums and worker skills. A standard result is that premiums are highest for workers with low levels of measured skills, and lowest among workers with high measured skills. Evidence from matched Current Population Survey (CPS) panels for 1989/90-1993/94, for example, produce wage level estimates of union premiums ranging from .23 log points among high school dropouts to .09 among college graduates. Longitudinal estimates controlling for worker-specific abilities, however, are .10 to .13 log points among all education groups, indicating an inverse relationship between measured premarket skill levels and relative union-nonunion unmeasured ability. Direct evidence from the NLSY on union-nonunion differences in AFQT aptitude scores further supports our thesis that union workers with high measured skills have low unmeasured skills, relative to nonunion workers. Also explored are alternative strategies to limit measurement error in the union status variable. Our findings provide support for the thesis that there is substantial homogeneity in union workforces, likely to result from union wage standardization policies, union success in organizing establishments where workers have homogeneous preferences and skills, employer selection on quality, and employee sorting such that few highly-skilled workers are in the union queue.

Suggested Citation

  • Barry T. Hirsch & Edward J. Schumacher, "undated". "Unions, Wages, and Skills," Working Papers 9606, East Carolina University, Department of Economics.
  • Handle: RePEc:wop:eacaec:9606
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    Citations

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    Cited by:

    1. Walsh, Frank, 2013. "The union wage effect and ability bias: Evidence from Ireland," Economics Letters, Elsevier, vol. 119(3), pages 296-298.
    2. Gittleman, Maury & Pierce, Brooks, 2007. "New estimates of union wage effects in the U.S," Economics Letters, Elsevier, vol. 95(2), pages 198-202, May.
    3. Edward J. Schumacher, "undated". "What Explains Union Membership Contract Coverage Wage Differentials?," Working Papers 9719, East Carolina University, Department of Economics.
    4. Lixin Cai & C. Jeffrey Waddoups, 2011. "Union Wage Effects in Australia: Evidence from Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 49(Supplemen), pages 279-305, July.
    5. Barry T. Hirsch, 2008. "Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 153-176, Winter.
    6. Yi, Hongtao, 2014. "Green businesses in a clean energy economy: Analyzing drivers of green business growth in U.S. states," Energy, Elsevier, vol. 68(C), pages 922-929.
    7. Francine D. Blau & Lawrence M. Kahn, 2005. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 184-193, February.
    8. repec:kap:iaecre:v:12:y:2006:i:3:p:342-357 is not listed on IDEAS
    9. Aaron J. Sojourner & Brigham R. Frandsen & Robert J. Town & David C. Grabowski & Min M. Chen, 2015. "Impacts of Unionization on Quality and Productivity," ILR Review, Cornell University, ILR School, vol. 68(4), pages 771-806, August.
    10. 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.
    11. Barry T. Hirsch & Edward J. Schumacher, "undated". "Union Wages, Rents, and Skills in Health Care Labor Markets," Working Papers 9721, East Carolina University, Department of Economics.
    12. Richard McGregory & James Peoples, 2013. "Compensation of Foreign and Domestic Nurses in the US," Journal of Labor Research, Springer, vol. 34(2), pages 203-223, June.
    13. Fernando Rios-Avila & Barry T. Hirsch, 2014. "Unions, Wage Gaps, and Wage Dispersion: New Evidence from the Americas," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(1), pages 1-27, January.
    14. Rudy Fichtenbaum, 2006. "Labour market segmentation and union wage gaps," Review of Social Economy, Taylor & Francis Journals, vol. 64(3), pages 387-420.
    15. Blackburn, McKinley L., 2007. "Estimating wage differentials without logarithms," Labour Economics, Elsevier, vol. 14(1), pages 73-98, January.
    16. David G. Blanchflower & Alex Bryson, 2003. "What Effect do Unions Have on Wages Now and Would 'What Do Unions Do' Be Surprised?," NBER Working Papers 9973, National Bureau of Economic Research, Inc.
    17. Barry T. Hirsch & Edward J. Schumacher, 2001. "Private Sector Union Density and the Wage Premium: Past, Present, and Future ," Journal of Labor Research, Transaction Publishers, vol. 22(3), pages 487-518, July.
    18. Cynthia Bansak & Steven Raphael, 2006. "Have Employment Relationships in the United States Become Less Stable?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(3), pages 342-357, August.
    19. Md. Rabiul Islam & Jakob Brochner Madsen & Hristos Doucouliagos, 2016. "Does Inequality Constrain the Power to Tax? Evidence from the OECD," Monash Economics Working Papers 29-16, Monash University, Department of Economics.
    20. Barry T. Hirsch & Edward J. Schumacher, 2000. "“Earnings Imputation and Bias in Wage Gap Estimates,”," Working Papers 0003, East Carolina University, Department of Economics.
    21. David Card & Thomas Lemieux & W. Craig Riddell, 2003. "Unionization and Wage Inequality: A Comparative Study of the U.S, the U.K., and Canada," NBER Working Papers 9473, National Bureau of Economic Research, Inc.
    22. Açıkgöz, Ömer Tuğrul & Kaymak, Barış, 2014. "The rising skill premium and deunionization," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 37-50.

    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
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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