Wage Dispersion in a Partially Unionized Labor Force

John Addison (), Ralph W. Bailey () and Stan Siebert ()

Discussion Papers from Department of Economics, 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 la- bor 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 de- composition 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 la- bor force characteristics had, for most groups considered, only a small negative effect. We supplement this preliminary three-factorial analy- sis with a ?ve-factorial analysis that allows us to examine effects from the wage-equation parameters in greater detail.

Keywords: wage dispersion; three-way variance decomposition; bivariate kernal density smoothing; union membership; deunionization; factorial experimental design (search for similar items in EconPapers)
JEL-codes: D3 J31 J51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-lab and nep-ltv
Date: 2009-06
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Related works:
Working Paper: Wage Dispersion in a Partially Unionized Labor Force (2009)
Working Paper: Wage Dispersion in a Partially Unionized Labor Force (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:bir:birmec:09-04

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