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Eastern Economic Journal

, Volume 44, Issue 4, pp 558–575 | Cite as

Do Unions Increase Labor Shares? Evidence from US Industry-Level Data

  • Andrew T. Young
  • Hernando Zuleta
Article

Abstract

We explore the relationship between union membership rates and labor shares using panel data on 35 industries, spanning the entire US economy, for the years 1983–2005. For the full sample, a standard deviation increase in union membership rates is associated with an increase in an industry’s labor share of about 10%. Starting from the mean labor share in our sample (0.614), this effect amounts to about 6 percentage points. However, the effect is weaker and not statistically significant for manufacturing industries. We control for the capital-to-output ratio in all of our estimations, and the results are consistent with an elasticity of substitution between capital and labor that is less than unity. As such, the positive union effect on labor share is consistent with either the right-to-manage or the efficiency bargaining model of unions.

Keywords

labor share capital share trade unions labor unions income distribution labor market institutions labor demand 

JEL

E25 J20 J51 

Notes

Acknowledgements

We thank Brandon Brice for excellent research assistance.

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Copyright information

© EEA 2017

Authors and Affiliations

  1. 1.Department of Economics, College of Business and EconomicsWest Virginia UniversityMorgantownUSA
  2. 2.Department of EconomicsUniversidad de los AndesBogotáColombia

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