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The impact of unions on nonunion wage setting: Threats and bargaining

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  • Green, David A.
  • Sand, Benjamin
  • Snoddy, Iain G.

Abstract

In this paper we provide new estimates of the impact of unions on nonunion wage setting. We allow the presence of unions to affect nonunion wages both through the typically discussed channel of nonunion firms emulating union wages in order to fend off the threat of unionisation and through a bargaining channel in which nonunion workers use the presence of union jobs as part of their outside option. We specify these channels in a search and bargaining model that includes union formation and, in our most complete model, the possibility of nonunion firm responses to the threat of unionisation. Our results indicate an important role played by union wage spillovers in lowering wages over the 1980-2010 period. We find de-unionisation can account for 38% of the decline in the mean hourly wage between 1980 and 2010, with two-thirds of that effect being due to spillovers. Both the traditional threat and bargaining channels are operational, with the bargaining channel being more important.

Suggested Citation

  • Green, David A. & Sand, Benjamin & Snoddy, Iain G., 2022. "The impact of unions on nonunion wage setting: Threats and bargaining," CLEF Working Paper Series 52, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    • Handle: RePEc:zbw:clefwp:52
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    1. repec:fth:prinin:338 is not listed on IDEAS
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    Cited by:

    1. Brändle, Tobias, 2024. "Unions and Collective Bargaining: The Influence on Wages, Employment and Firm Survival," GLO Discussion Paper Series 1457, Global Labor Organization (GLO).

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