Union Bargaining Power and the Amenity-Wage Tradeoff

Lorenzo Lagos ()
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Lorenzo Lagos: Brown University

No 17034, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper studies the relation between the wage and amenity components of compensation under collective bargaining. Using the universe of collective bargaining agreements (CBAs) in Brazil, I augment information on workers' wages with the comprehensive set of amenities codified in the text of these contracts. I then estimate the effects of increasing union bargaining power with a difference-in-difference strategy that leverages 1) a judicial decision that prevented the expiration of existing CBA provisions—a policy known as ultractivity—and 2) gaps in CBA coverage across establishments when the policy was enacted. I find that boosting union power causes an increase in both wages and CBA clauses without a subsequent decrease in employment. A revealed preference approach to estimating the wage-equivalent value of negotiated clauses shows that amenity value also increases, comprising approximately 45% of workers' total gains in compensation. Results are consistent with collective bargaining functioning as a labor market institution that counters monopsony power, but where employers retain the right-to-manage the composition of their workforce.

Keywords: collective bargaining; unions; amenities; compensating differentials (search for similar items in EconPapers)
JEL-codes: J32 J42 J52 K31 (search for similar items in EconPapers)
Pages: 107 pages
Date: 2024-05
New Economics Papers: this item is included in nep-gth and nep-lma
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Citations: View citations in EconPapers (2)

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