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Evolution of Union Wages and Determinants

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Handbook of Labor, Human Resources and Population Economics

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Abstract

Labor unions, chiefly through collective organizing and bargaining, almost universally increase the wages of their members, even after controlling for individual, job, firm, and other characteristics that affect pay (Fang and Verma, Union wage premium. Perspectives on labour and income, Statistics Canada, Ottawa, 2002). This earnings advantage of union workers is known as the union wage premium. The premium differs by country, industry, worker, and the estimated wage premium varies by study methodology, among other factors. This chapter explains the premium’s determinants and charts how they have changed over time, leading to a typically reduced wage effect in recent years relative to decades past. Such changes include globalization, technological change and a rise in the skill premium, a shift toward the service industry, less favorable labor law, and possibly increased opposition toward unions. Methodological challenges and empirical techniques are reviewed, and premium estimates by country/region are presented. An average union wage premium of 0–20% is found based on recent research, with considerable variation depending on the methodology and country under study. The literature focuses on several developed countries and is limited in a number of developing nations, with data availability being the primary reason. The results from the developing world exhibit more variation but often fall in line with those from developed countries like the United States.

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Acknowledgments

Responsible Section Editor: Professor Dr. Klaus F. Zimmermann.

The article has benefitted from valuable comments of the editors and anonymous referees. Financial support by The Stephen Jarislowsky Foundation and Social Sciences and Humanities Research Council of Canada (890-2020-0051) and National Social Sciences Foundation of China Research Grant (19BGJ005) is gratefully acknowledged. There is no conflict of interest.

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  1. Memorial University of Newfoundland, Newfoundland and Labrador, Canada

    Tony Fang & John Hartley

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  1. Tony Fang
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    Klaus F. Zimmermann

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  1. Center for Population, Development and Labour Economics at UNU – MERIT, Maastricht University, Maastricht, The Netherlands

    Klaus F. Zimmermann

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Fang, T., Hartley, J. (2022). Evolution of Union Wages and Determinants. In: Zimmermann, K.F. (eds) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-57365-6_374-1

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