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Title: Do unions have egalitarian wage policies for their own employees? Evidence from the US 1959-2016
Citation Type: Miscellaneous
Publication Year: 2022
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Abstract: While labor unions bargain for more equality among their members and in the general society, little is known about their own compensation practices. Using newly assembled administrative data covering union NHQs for the period 1959- 2016 and almost all U.S. labor unions workers over the period 2000-2016, we show that unions do “as they preach”. They pay wages that are on average almost 20% higher than in comparable U.S. private firms, but much more equally distributed: Gini coefficients are 20% smaller among unions and the share of total earnings ac- cruing to the top 1% of wage earners is twice smaller. We argue that such a low level of inequality, especially at the top, is puzzling because union leaders do have substantial margins to set their own pay. We show that the low level of inequality observed among union employees cannot be accounted for by market-type expla- nations, such as a low dispersion of skills among them, a lower average size in union than non-union firms, or fewer hierarchical levels in these firms. Rather, we provide evidence of the existence of a social norm against high pay in the union sector, which results in low inequality. Our results shed new light on how pay norms and institutions can affect real pay, even in a declining sector where firms have strong incentives to perform well in order to survive.
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Authors: Breda, Thomas; Santini, Paolo
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Data Collections: IPUMS CPS
Topics: Labor Force and Occupational Structure, Poverty and Welfare
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