Nonunion Wage Rates and the Threat of Unionization

Henrys Farber

ILR Review, 2005, vol. 58, issue 3, 335-352

Abstract: Using CPS data for 1977–2002, the author investigates the extent to which the threat of union organization increases nonunion wages and reduces the union/nonunion wage differential. The results are mixed. Estimates employing the predicted probability of union membership as a measure of the union threat show no important link between the union threat and either nonunion wages or the union wage gap. Estimates focusing on two states' introduction of right-to-work laws, which arguably affect the threat of union organization independently of changes in labor demand, show that in one state the law was associated with a statistically significant drop in nonunion wages. Finally, an analysis of wage data for three industries that underwent deregulation—another natural experiment in which labor demand changes are unlikely to have been a complicating factor—yields stronger evidence of threat effects on nonunion wages than do either of the other two analyses.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ilrrev:v:58:y:2005:i:3:p:335-352

DOI: 10.1177/001979390505800302

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