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Wage Dispersion in a Partially Unionized Labor Force

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  • Addison, John T.

    (Durham University Business School)

  • Bailey, Ralph

    (University of Birmingham)

  • Siebert, W. Stanley

    (University of Birmingham)

Abstract

Taking as our point of departure a model proposed by David Card (2001), we suggest new methods for analyzing wage dispersion in a partially unionized labor market. Card's method disaggregates the labor population into skill categories, which procedure entails some loss of information. Accordingly, we develop a model in which each worker individually is assigned a union-membership probability and predicted union and nonunion wages. The model yields a natural three-way decomposition of variance. The decomposition permits counterfactual analysis, using concepts and techniques from the theory of factorial experimental design. We examine causes of the increase in U.K. wage dispersion between 1983 and 1995. Of the factors initially considered, the most influential was a change in the structure of remuneration inside both the union and nonunion sectors. Next in importance was the decrease in union membership. Finally, exogenous changes in labor force characteristics had, for most groups considered, only a small negative effect. We supplement this preliminary three-factorial analysis with a five-factorial analysis that allows us to examine effects from the wage-equation parameters in greater detail.

Suggested Citation

  • Addison, John T. & Bailey, Ralph & Siebert, W. Stanley, 2009. "Wage Dispersion in a Partially Unionized Labor Force," IZA Discussion Papers 4202, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4202
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    References listed on IDEAS

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    3. Richard B. Freeman, 2005. "What Do Unions Do?-- The 2004 M-Brane Stringtwister Edition," Journal of Labor Research, Transaction Publishers, vol. 26(4), pages 641-668, November.
    4. John T. Addison & Ralph W. Bailey & W. Stanley Siebert, 2007. "The Impact of Deunionisation on Earnings Dispersion Revisited," Research in Labor Economics, in: Aspects of Worker Well-Being, pages 337-363, Emerald Group Publishing Limited.
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    Cited by:

    1. Ensar Yilmaz & Sayin San, 2017. "Wage gap and dispersion in a partially unionized structure in Turkey," Empirical Economics, Springer, vol. 52(2), pages 577-597, March.

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    More about this item

    Keywords

    wage dispersion; three-way variance decomposition; bivariate kernel density smoothing; union membership; deunionization; factorial experimental design;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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