wage gap is larger for women than for men, resulting in a larger “between-sector” effect. Third, the union wage gap is larger for lesser than higher skilled men, while this is not the case for women. Another important conclusion is that the impacts of unions on the wage structure in the U.S., Canada, and the U.K. have followed remarkably similar trends over the last two decades. In all three countries, the unionization rate and the union wage differential have declined substantially since the early 1980s. For men, this has resulted in a steady erosion of the equalizing effect of unions that explains a significant fraction of the growth in wage inequality in the U.S. and U.K. The decline of female unionization has been much smaller than that of men. As a consequence, unionization rates of men and women are nearly equal now in all three countries, marking a sharp departure from the historical pattern. However, the modest decline in union coverage among women had little impact on female wage inequality. Interestingly, in both the U.S. and the U.K. our estimates of the effects of unions on wage inequality were virtually unchanged between 1993 and 2001. This is consistent with the slowdown in the growth of inequality in both countries during the 1990s, relative to the 1980s. However, in Canada there was little change in wage inequality during the 1980s and 1990s, despite a moderate drop in union coverage among men. The Canadian experience suggests that other factors offset the pressures toward widening inequality associated with the decline in unionization. Although trends in union coverage and union wage effects are very similar in the three countries, there are substantial differences in the levels of unionization and wage inequality. The pattern of cross- country differences in wage inequality is consistent with the pattern of wage compression effects. Our calculations indicate that differences in union wage compression effects can account for almost one-half of the U.K. - U.S. differential in the variance of wages in the early 1990s, and over two-thirds of the differential in 2001. In What Do Unions Do? , the impact of unions on the distribution of income is a leading example of how the "voice" aspect of unionism (reduced inequality among union workers – the “within-sector” effect) dominates its "monopoly" face (inequality between union and nonunion workers – the “between- sector” effect). Twenty years later, our study confirms that this key finding remains robust to the choice of country and time period. An important qualification, however, is the case of women where we show that these two aspects of the impact of unions on wage inequality more or less offset each other.
26 1 This possibility was emphasized by Lewis (1963). The presence of unionized employers may lead to higher wages in the nonunion sector (if nonunion employers raise wages to deter unionization efforts) or to lower wages (if unionization reduces employment in the union sector, increasing labor supply in the nonunion sector).
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- Fall '13
- Economics, Trade union, Nonunion