From the Fringe to the Fore: Labor Unions and Employee Compensation

Matthew Knepper ()

The Review of Economics and Statistics, 2020, vol. 102, issue 1, 98-112

Abstract: Conventional wisdom suggests that labor unions raise worker wages, while the newer empirical literature finds only negligible earnings effects. I reconcile this apparent contradiction by arguing that collective bargaining targets fringe benefits. Using U.S. firm-level data from the Bureau of Economic Analysis (BEA) Multinational Enterprise Survey and Compustat, I exploit a regression discontinuity in majority rule union elections to compare changes in employee compensation at firms whose establishment barely won a union election against those that barely lost an election. Following unionization, average employee compensation and employer pension contributions increase, which raises the labor share of compensation.

Date: 2020
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