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From the Fringe to the Fore: Labor Unions and Employee Compensation

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  • Matthew Knepper

    (Bureau of Economic Analysis)

Abstract

Conventional wisdom suggests that labor unions raise worker wages, while the newer empirical literature finds only negligible earnings effects. I reconcile this apparent contradiction by arguing that collective bargaining targets fringe benefits. Using U.S. firm-level data from the Bureau of Economic Analysis (BEA) Multinational Enterprise Survey and Compustat, I exploit a regression discontinuity in majority rule union elections to compare changes in employee compensation at firms whose establishment barely won a union election against those that barely lost an election. Following unionization, average employee compensation and employer pension contributions increase, which raises the labor share of compensation.

Suggested Citation

  • Matthew Knepper, 2020. "From the Fringe to the Fore: Labor Unions and Employee Compensation," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 98-112, March.
    • Handle: RePEc:tpr:restat:v:102:y:2020:i:1:p:98-112
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    3. Brändle, Tobias, 2024. "Unions and Collective Bargaining: The Influence on Wages, Employment and Firm Survival," GLO Discussion Paper Series 1457, Global Labor Organization (GLO).
    4. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
    5. Arif, Imran, 2021. "Productive knowledge, economic sophistication, and labor share," World Development, Elsevier, vol. 139(C).
    6. Ioana Marinescu & Yue Qiu & Aaron Sojourner, 2021. "Wage Inequality and Labor Rights Violations," NBER Working Papers 28475, National Bureau of Economic Research, Inc.
    7. Kraft, Kornelius & Lammers, Alexander, 2021. "Bargaining Power and the Labor Share - a Structural Break Approach," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242342, Verein für Socialpolitik / German Economic Association.
    8. Lu He & Yulei Rao & Lin Xu, 2023. "Appointment-Based CEO Connectedness and Employee Compensation: Empirical Evidence from China," Sustainability, MDPI, vol. 15(17), pages 1-15, August.
    9. Morris M. Kleiner & Wenchen Wang, 2023. "The Labor Market Effects of Occupational Licensing in the Public Sector," Staff Report 645, Federal Reserve Bank of Minneapolis.
    10. Isaac Ketu & Arsene Mouongue Kelly & Jules-Eric Tchapchet Tchouto, 2024. "Does economic complexity reduce the size of the shadow economy in African countries?," SN Business & Economics, Springer, vol. 4(1), pages 1-27, January.
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