Whose wages do unions raise? A dynamic model of unionism and wage rate determination for young men
✍ Scribed by Francis Vella; Marno Verbeek
- Publisher
- John Wiley and Sons
- Year
- 1998
- Tongue
- English
- Weight
- 216 KB
- Volume
- 13
- Category
- Article
- ISSN
- 0883-7252
No coin nor oath required. For personal study only.
✦ Synopsis
We estimate the union premium for young men over a period of declining unionization (1980±87) through a procedure which identi®es the alternative sources of the endogeneity of union status. While we estimate the average increase in wages resulting from union employment to be in excess of 20% we ®nd that the return to unobserved heterogeneity operating through union status is substantial and that the union premium is highly variable. We also ®nd that the premium is sensitive to the form of sorting allowed in estimation. Moreover, the data are consistent with comparative advantage sorting. Our results suggest that the unobserved heterogeneity which positively contributes to the likelihood of union membership is associated with higher wages. We are unable, however, to determine whether this is due to the ability of these workers to extract monopoly rents or whether it re¯ects the more demanding hiring standards of employers faced by union wages.