Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 Introduction
- 2 The development of the union movements of Britain and the United States
- 3 The orthodox theoretical framework: an overview
- 4 Trade union objectives and the monopoly union model
- 5 Bargaining models of the trade union
- 6 Empirical estimates of the union wage differential
- 7 The impact of trade unions on productivity, investment, profitability, employment and hours
- 8 Unions and the macroeconomy
- 9 Conclusion
- References
- Index
6 - Empirical estimates of the union wage differential
Published online by Cambridge University Press: 07 October 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 Introduction
- 2 The development of the union movements of Britain and the United States
- 3 The orthodox theoretical framework: an overview
- 4 Trade union objectives and the monopoly union model
- 5 Bargaining models of the trade union
- 6 Empirical estimates of the union wage differential
- 7 The impact of trade unions on productivity, investment, profitability, employment and hours
- 8 Unions and the macroeconomy
- 9 Conclusion
- References
- Index
Summary
Introduction
The union–nonunion wage differential has often been used as a measure of union power. Macroeconomic models, and models of the aggregate labour market, commonly use it for this purpose, since this differential is argued to be positively correlated with union power (see, for example, Layard, Metcalf and Nickell (1978), Nickell and Andrews (1983) and Layard and Nickell (1985, 1986)). In chapter 3 it was argued that, at the microeconomic level, although the existence of economic rents was a necessary condition for union differentials, higher union wages would be found only where the trade union had the necessary power to force the firm to give up some of its surplus. Therefore the union differential would be positively correlated with union power, as assumed in macroeconomic work.
Calculation of the union wage differential is sensitive to the method of estimation and to the degree of aggregation of the data. Estimates of the differential range from over 70% (Minford, 1983), to insignificantly different from zero, as we shall see in this chapter. Estimates obtained using aggregate data are typically far larger than those from individual cross-section data, and these in turn are larger than estimates from panel studies. Which estimates can we believe? What are the problems involved in the calculation of these estimates? To understand the issues involved it is vital that we understand the methods used to estimate union wage differentials and the econometric problems facing researchers in this field.
- Type
- Chapter
- Information
- The Economics of the Trade Union , pp. 157 - 182Publisher: Cambridge University PressPrint publication year: 1994