The Joint Determination of Union Status and Union Wage Effects: Some Tests of Alternative Models

Abstract

This paper studies the effects of unions on the structure of wages, using an estimation technique that explicitly accounts for misclassification errors in reported union status, and potential correlations between union status and unobserved productivity. The econometric model is estimated separately for five skill groups using a large panel data set formed from the U.S. Current Population Survey. The results suggest that unions raise wages more for workers with lower levels of observed skills. In addition, the patterns of selection bias differ by skill group. Among workers with lower levels of observed skill, unionized workers are positively selected, whereas union workers are negatively selected from among those with higher levels of observed skill. KEYWORDS:Longitudinal data, unobserved heterogeneity, measurement error, trade unions. 'Originally prepared for the 1991 Conference of the Econometric Study Group in Bristol, England. I am grateful to Michael Quinn for outstanding research assistance, and to Gary Solon for pointing out an error in an earlier draft. Thanks to Orley Ashenfelter, Henry Farber, Alan Krueger, the editor and two referees for comments. 'See Robinson (1989) for a discussion of these approaches and a comparison of the underlying assumptions typically used in each.

Wages and the bargaining regime in a corporatist setting: the Netherlands

“…One of the main sources of selection bias is high skilled workers not being covered, thereby underestimating the union differential (Robinson, 1989). Unfortunately we are not able to control for individual fixed effects since we only observe one cross-section and are unable to use regime switchers as a source of identification.…”

Semiparametric Bayes analysis of longitudinal data treatment models

“…Simple OLS estimates of the union wage premium will, therefore, provide an upper bound of the true union wage e ect, since more productive workers will tend to join the union. Other studies, such as Robinson (1989), claim that union pay scales are less sensitive to individual ability, implying that less productive workers are more likely to join the union. In this case, OLS estimates provide a lower bound of the true e ect.…”

“…In this case, OLS estimates provide a lower bound of the true e ect. Robinson (1989) also argues that the sector of relative advantage may be di erent for di erent workers. Some workers may do better in the union sector, while others will be more successful in the non-union sector.…”

Imperfect goods and labor markets, and the union wage gap

“…A rather extreme example is Canada. Here, Blanchflower (1996)'s estimation is 4.8% (insignificant), while Robinson (1989) obtains wage gaps from 20% up to 43%, depending on the methodology employed.…”