EconPapers    
Economics at your fingertips  
 

Does unionization reduce wage inequality? New evidence from business dynamism

Chi-Chur Chao and Mong Shan Ee

International Review of Economics & Finance, 2024, vol. 92, issue C, 690-703

Abstract: Incorporating the business-dynamism effect, this paper examines distribution and welfare effects of labor unions. An increase in unionization can raise the unskilled wage rate and lower the skilled wage rate in the economy, and wage inequality can be further reduced by the business-dynamism effect of firm exit. Nonetheless, the inequality-reducing role might be mitigated by the delay of firm exit caused by labor unions. In addition, the rise in unionization can solve the problem of excessive entry in the oligopolistic market, thereby improving welfare of the economy. Using multiple-country panel data, we find a negative relationship between unionization and wage inequality. This finding confirms the theoretical prediction of the inequality-reducing effect of labor unions.

Keywords: Labor unions; Business dynamism; Wages; Welfare (search for similar items in EconPapers)
JEL-codes: D50 J31 J51 L13 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056024001229
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:92:y:2024:i:c:p:690-703

DOI: 10.1016/j.iref.2024.02.048

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:reveco:v:92:y:2024:i:c:p:690-703