What Do (Thousands of) Unions Do ? Union-Specific Pay Premia and Inequality

Ellora Derenoncourt (), François Gerard (), Lorenzo Lagos () and Claire Montialoux ()
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Ellora Derenoncourt: Princeton University
François Gerard: UCL - University College of London [London], IFS - Laboratory of the Institute for Fiscal Studies - Institute for Fiscal Studies
Lorenzo Lagos: Brown University
Claire Montialoux: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique

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Abstract: We study the role of union heterogeneity in shaping wages and inequality among unionized workers. Using linked employer-employee data from Brazil and job moves across multi-firm unions, we estimate over 4,800 union-specific pay premia. Unions explain 3-4% of earnings variation. While unions raise wages on average, the standard deviation in union effects is large (6-7%). Validating our approach, wages fall in markets with higher vs. lower union premia following a nationwide right-to-work law. Linking premia to detailed data on union attributes, we find that unions with strike activity, collective bargaining agreements, internal competition, and skilled leaders secure higher wages. High-premium unions compress wage gaps by education while the average union exacerbates them. Post right-to-work, however, worker support for high-premium unions falls when between-group bargaining differentials are large. Our findings show that unions are not a monolith-their structure and actions shape their wage effects and, consequently, worker support.

Date: 2025-08-01
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