Union Effects on Nonunion Wages: Evidence from Panel Data on Industries and Cities

The authors test for threat and crowding effects of unions on non-union wages at the industry and city levels, using panel data on the percent organized and nonunion industry and city wage differentials constructed from Current Population Surveys over the period 1973–89. At the industry level, increases in the percent organized were associated with decreases in the nonunion industry wage differential, suggesting that crowding effects were the predominant union effect on nonunion industry wage differentials. In contrast, at the city level increases in the percent organized were associated with increases in the nonunion city wage differential, suggesting that threat effects predominated. The authors also find evidence of negative cross-occupation union effects on nonunion industry wage differentials, supporting their hypothesis that the industry-level results were partly driven by complementarity between union and nonunion labor.