Applied Micro Seminar - David Green (UBC)

Applied Microeconomics Seminar Series

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Reshad Ahsan

rahsan@unimelb.edu.au

T: +61390358147

Title: ​Estimating Union Wage Spillovers: The Role of Bargaining and Emulation Effects

Abstract: In this paper we provide new estimates of the impact of unions on nonunion wage setting. We allow the presence of unions to affect nonunion wages both through the typically discussed channel of nonunion firms emulating union wages in order to fend off the threat of unionisation and through a bargaining channel in which nonunion workers use the presence of union jobs as part of their outside option. We specify these channels in a search and bargaining model that includes union formation and, in our most complete model, the possibility of nonunion firm responses to the threat of unionisation. Our results indicate an important role played by union wage spillovers in lowering wages over the 1980-2010 period. For the entire population we find de-unionisation can account for between 30% and 47% of the decline in the mean hourly wage in the US between 1980 and 2010, with larger effects for lower educated men.

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