The Impact of Unions on Nonunion Wage Setting: Threats and Bargaining

David A. Green, Ben M. Sand, Iain G. Snoddy and Jeanne Tschopp

Journal of Political Economy, 2026, vol. 134, issue 10, 3090 - 3137

Abstract: We provide new estimates of spillover effects of unions on nonunion wages. We work with a search and bargaining model, endogenizing union formation and including firm responses to unionization threats. Unions affect nonunion wages through a standard threat channel (firms raise wages to fend off unionization) and a bargaining channel (union jobs are part of worker outside options). Model estimates imply that deunionization accounts for a third of the decline in the US mean wage between 1980 and 2010, with half the effect due to spillovers. Both threat and bargaining channels are operational. The bargaining channel is more important.

Date: 2026
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