Macroeconomic Differences in Public and Private Union Density: An Analysis of U.S. State Economies

Abstract

In this paper, we investigate the macroeconomic impact on U.S. state economies of differences in the percent of the employed in private sector unions and the percent of the employed in public sector unions. Using annual data from 1983 through 1996 for the 48 contiguous U.S. states, we search for contrasting impacts of private and public sector union density on state economic conditions. Four individual equations are estimated, one for each economic measure: state unemployment rates, wage inflation, productivity growth, and GSP growth. Then, tests are conducted to determine the relative difference between private and public unions. Using a fixed effects model, in each equation we find significant differences between the effects of public and private union density on labor markets and economic growth. We conclude that disaggregating union data provides some insights toward the future as public unions expand to represent a larger percentage of total union membership.