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Longitudinal Analyses of the Effects of Tade Unions

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Richard B. Freeman

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Abstract

This paper examines how measurement error biases longitudinal estimates of union effects. It develops numerical examples, statistical models, and econometric estimates which indicate that measurement error is a major problem in longitudinal data sets, so that longitudinal analyses do not provide the research panacea for determining the effects of unionism (or other economic forces) some have suggested. There are three major findings:1) The difference between the cross-section and longitudinal estimates is attributable in large part to random error in the measurement of who changes union status. Given modest errors of measurement, of the magnitudes observed,and a moderate proportion of workers changing union status, also of the magnitudes observed, measurement error biases downward estimated effects of unions by substantial amounts. 2) Longitudinal analysis of the effects of unionism on nonwage and wage outcomes tends to confirm the significant impact of unionism found in cross-section studies, with the longitudinal estimates of both nonwage and wage outcomes lover in the longitudinal analysis than in the cross-section analysis of the same data set. 3) The likely upward bias of cross-section estimates of the effect of unions and the likely downward bias of longitudinal estimates suggests that,under reasonable conditions, the two sets of estimates bound the "true" union impact posited in standard models of what unions do.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1207.

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Date of creation: Sep 1983
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Handle: RePEc:nbr:nberwo:1207

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gerald S. Goldstein & Mark V. Pauly, 1976. "Group Health Insurance as a Local Public Good," NBER Chapters, in: The Role of Health Insurance in the Health Services Sector, pages 73-114 National Bureau of Economic Research, Inc. [Downloadable!]
  2. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January. [Downloadable!] (restricted)
  3. Aigner, Dennis J., 1973. "Regression with a binary independent variable subject to errors of observation," Journal of Econometrics, Elsevier, vol. 1(1), pages 49-59, March. [Downloadable!] (restricted)
  4. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January. [Downloadable!] (restricted)
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  5. Richard B. Freeman, 1980. "Unionism and the dispersion of wages," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(1), pages 3-23, October.
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  6. John M. Abowd & Henry S. Farber, 1982. "Job queues and the union status of workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 35(3), pages 354-367, April.
  7. Brown, Charles, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 113-34, February. [Downloadable!] (restricted)
  8. Jacob Mincer, 1981. "Union Effects: Wages, Turnover, and Job Training," NBER Working Papers 0808, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Mellow, Wesley S, 1981. "Unionism and Wages: A Longitudinal Analysis," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 43-52, February. [Downloadable!] (restricted)
  10. Duane E. Leigh, 1981. "The effect of unionism on workers' valuation of future pension benefits," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(4), pages 510-521, July.
  11. Barry T. Hirsch, 1982. "The interindustry structure of unionism, earnings, and earnings dispersion," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 36(1), pages 22-39, October.
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