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Job Queues and the Union Status of Workers
Abstract
This paper develops a model of the determination of the union status of workers that allows for the possibility of queuing for union jobs. The empirical results derived, using a sample from the University of Michigan Panel Study of Income Dynamics, are supportive of the queuing hypothesis. The no-queue model can be rejected using a likelihood-ratio test. This suggests that a simple probit or logit model for union status is misspecified because it is not based on any consistent behavioral theory. An important implication of the model is that because most new entrants to the labor market prefer union jobs but cannot get them and because accrual of nonunion seniority makes workers progressively less likely to desire union jobs, the union status of workers is largely determined by their success in being selected from the queue early in their working life. (Abstract courtesy JSTOR.)
... Second, union members may be highly selected. Again, the direction of selection is not clear: less productive workers are more likely to queue for union jobs because they gain more from union efforts to standardise wages but, because the supply of union jobs exceeds demand for those jobs, employers can pick the best workers from those queueing for the union jobs (Abowd and Farber, 1982). Regardless of the direction of the selection, it has proven difficult to come up with a research design that convincingly deals with this problem. ...
... Thus, if outside options reflect productivity, wage standardization would induce negative sorting since it would be the least productive workers who would queue for union jobs. However, as Abowd and Farber (1982) show, if supply of union jobs is less than the demand, employers would cherry-pick from the queue, with the result that union workers originate from the middle of the productivity distribution. It is standard in the union wage premium literature to find that the raw union-non-union wage gap closes with the addition of human capital in the wage equation, indicating positive selection into union status based on worker observed traits. ...
We exploit changes in tax subsidies for union members in Norway to identify the effects of changes in firm-level union density on productivity and wages. Increased deductions in taxable income for union members led to higher membership rates and contributed to a lower decline in union membership rates over time in Norway. Accounting for selection effects and the potential endogeneity of unionization, the results show that increasing union density at the firm level leads to a substantial increase in both productivity and wages. The wage effect is larger in more productive firms, consistent with rent-sharing models.
... On the one hand, firms with a collective agreement might discriminate more strongly against union members, because the regular wage negotiations make unions' bargaining power more salient and therefore more threatening. Due to the resulting higher wages of firms covered by a collective agreement, these firms are likely to attract more applicants (Abowd and Farber, 1982;Farber, 1992), which allows them to be more selective and to avoid applicants with less favorable characteristics. On the other hand, due to the collective agreement and resulting wages, employers may no longer fear the threat of potential wage increases. ...
I estimate management opposition to unions in terms of hiring discrimination with a large-scale field experiment in the German labor market. By sending 13000 fictitious job applications, revealing union membership in the CV and pro-union sentiment via social media accounts, I provide evidence for hiring discrimination. Callback rates for union members decrease on average by 15%. Discrimination is strongest in the presence of a high sectoral share of union members and large firm size. I further explore variation in regional and sectoral strike intensity and find weak evidence that discrimination increases if a sector is exposed to an intense strike. Yet, strike activities account only for a minor extent of hiring discrimination. My results indicate that hiring discrimination can be explained by union threat effects. Sectors with low collective bargaining coverage have lower hiring discrimination and in the absence of collective agreements sectors are less likely to follow collective agreement wage setting. Taken together, these results provide the first large-scale experimental evidence of management opposition to labor unions.
... The wage of a worker can only be observed when the worker is employed and this is possible based on the decision of the worker to enter the labor market, and the employer's decision to hire that worker (Mohanty 2001;Abowd and Farber 1982). Apart from employers' selectivity in hiring, some workers (especially women) selfselect themselves to self-employment due to its flexibility when it is compared to wage employment. ...
The wage of an individual is observed only when he/she is employed. However, getting employment requires two decisions. First, an individual has to decide to participate in the labor market, and the second is the decision of an employer to hire that individual. Since female labor market participation often differs from men, and employers’ decisions to hire may also be influenced by gender, it is appropriate to account for this double-header selection process. Our results indicate that women on average receive lower wages than men regardless of the type of sample correction procedure used for the analysis. We find that the gender wage gap is smaller among formal wage employees and the gap decreases as the education level increases. The significant differences in the point estimates of the different selection correction are an indication that failure to use the right sample correction procedure may possibly lead to an inconsistent coefficient estimate.
... For a further discussion of these issues, seeLemieux (1993Lemieux ( , 1998,Card (1996), andAbowd and Farber (1982).28 Journal of Collective Bargaining in the Academy, Vol. 7, Iss. 1 [2015], Art. 4 https://thekeep.eiu.edu/jcba/vol7/iss1/4 ...
... Second, as noted, the weighted and unweighted versions of the Gallup union density series are very similar (see Online Appendix Figure gap estimates are biased upward-the omitted quality variables are positively correlated with union status." Abowd and Farber (1982) and Farber (1983) enriched the model of selection into unions to include selection by union employers from among the pool of workers who would like a union job. They argue that because unions confer a larger wage advantage to the less skilled, the marginal cost of skill to union employers is lower than for nonunion employers. ...
U.S. income inequality has varied inversely with union density over the past hundred years. But moving beyond this aggregate relationship has proven difficult, in part because of limited microdata on union membership prior to 1973. We develop a new source of microdata on union membership dating back to 1936, survey data primarily from Gallup (N ≈ 980,000), to examine the long-run relationship between unions and inequality. We document dramatic changes in the demographics of union members: when density was at its mid-century peak, union households were much less educated and more nonwhite than other households, whereas pre-World-War-II and today they are more similar to nonunion households on these dimensions. However, despite large changes in composition and density since 1936, the household union premium holds relatively steady between ten and twenty log points. We then use our data to examine the effect of unions on income inequality. Using distributional decompositions, time series regressions, state-year regressions, as well as a new instrumental-variable strategy based on the 1935 legalization of unions and the World-War-II era War Labor Board, we find consistent evidence that unions reduce inequality, explaining a significant share of the dramatic fall in inequality between the mid-1930s and late 1940s.
... These benefits and costs are likely to vary across workers, firms, industries and even geographic areas. Individual membership status is also conditional on union supply, which can also vary by firm, industry and geographic area, and may entail queueing for union jobs (Abowd & Farber, 1982), thereby potentially leading to frustrated demand for unionisation, or may lead to its over-supply (see, e.g., Bryson & Gomez, 2003;Willman et al., 2007). ...
The paper examines whether workplace gender dynamics contributed to the decline of unions. To this end, it reviews relevant literature and proposes three hypotheses, which it then tests using alternative empirical analyses and data from Workplace Employment Relations Survey (WERS) and British Social Attitudes Survey (BSAS). The results from employee‐level analysis reveal that, compared with women, (i) men were significantly less likely to have never been union members and (ii) they were also significantly more likely to have been union members in the past. In addition, workplace‐level analysis using WERS reveals that there is an inverse link between union membership and the share of women in workplaces, which is also found to have a non‐linear form. The paper ponders if unions may need to encompass broader agenda than those informed by the median voter to improve their fate.
... Optimism of this type, in fact, is an external manifestation of one's inner positive attitude. Both these variables -positive attitude and optimism -thus are related to each other in a very subtle manner, one indicating ones internal nature and the other representing its external manifestation (Mohanty, 2009a(Mohanty, , 2010. of a bivariate decision process involved in the determination of the worker's employment and wage (Abowd and Farber, 1982;Farber, 1983;Mohanty, 2010). Note that workers seeking employment have to first enter the job market, and then conditional on their participation decision, the employers may hire them from the pool of applicants. ...
In the classical setting of self-selection, the goal is to learn $k$ models, simultaneously from observations $(x^{(i)}, y^{(i)})$ where $y^{(i)}$ is the output of one of $k$ underlying models on input $x^{(i)}$. In contrast to mixture models, where we observe the output of a randomly selected model, here the observed model depends on the outputs themselves, and is determined by some known selection criterion. For example, we might observe the highest output, the smallest output, or the median output of the $k$ models. In known-index self-selection, the identity of the observed model output is observable; in unknown-index self-selection, it is not. Self-selection has a long history in Econometrics and applications in various theoretical and applied fields, including treatment effect estimation, imitation learning, learning from strategically reported data, and learning from markets at disequilibrium. In this work, we present the first computationally and statistically efficient estimation algorithms for the most standard setting of this problem where the models are linear. In the known-index case, we require poly$(1/\varepsilon, k, d)$ sample and time complexity to estimate all model parameters to accuracy $\varepsilon$ in $d$ dimensions, and can accommodate quite general selection criteria. In the more challenging unknown-index case, even the identifiability of the linear models (from infinitely many samples) was not known. We show three results in this case for the commonly studied $\max$ self-selection criterion: (1) we show that the linear models are indeed identifiable, (2) for general $k$ we provide an algorithm with poly$(d) \exp(\text{poly}(k))$ sample and time complexity to estimate the regression parameters up to error $1/\text{poly}(k)$, and (3) for $k = 2$ we provide an algorithm for any error $\varepsilon$ and poly$(d, 1/\varepsilon)$ sample and time complexity.
Vi benytter endringer i satsene for fagforeningsfradrag i Norge mellom 2001 og 2012 og administrative registerdata til å identifisere hvordan skattefradraget og nettoprisen for medlemskap påvirker sannsynligheten for å være medlem i en fagforening. Vi finner at økt subsidiering bidrar til økt medlemskapssannsynlighet, mens økte priser for medlemskap reduserer sannsynligheten for fagforeningsmedlemskap. Hvis fagforeningsfradraget ikke hadde endret seg siden 2001, ville den aggregerte organiseringsgraden i privat sektor ha vært 5 prosentpoeng lavere enn den faktisk er. Betydningen av fradraget er imidlertid vesentlig større for noen næringer, og da særlig for industrien og for varehandelen.
This study investigates random utility models in which the observed binary outcome does not reflect the binary choice of a single decision-maker, but rather the joint unobserved binary choices of two decision-makers. Under the usual normality assumptions, the model that arises for the observed binary outcome is not a univariate probit model, but rather a bivariate probit model in which only one of the four possible outcomes is observed. Estimation and identification issues are discussed, and the implications for sample selectivity problems are noted.
This paper examines the effect of trade unionism on the exit behavior of workers in the context of Hirschman's exit-voice
dichotomy. Unionism is expected to reduce quits and permanent separations and raise job tenure by providing a “voice” alternative
to exit when workers are dissatisfied with conditions. Empirical evidence supports this contention, showing significantly
lower exit for unionists in several large data tapes. It is argued that the grievance system plays a major role in the reduction
in exit and that the reduction lowers cost and raises productivity.
This study examines the effect of trade unionism on the dispersion of wages among male wage and salary workers in the private sector in the United States. It finds that the application of union wage policies designed to standardize rates within and across establishments significantly reduces wage dispersion among workers covered by union contracts and that unions further reduce wage dispersion by narrowing the white-collar/blue-collar differential within establishments. These effects dominate the more widely studied impact of unionism on the dispersion of average wages across industries, so that on net unionism appears to reduce rather than increase wage dispersion or inequality in the United States. (Abstract courtesy JSTOR.)
Given falling birth rates, ageing baby boomers approaching retirement age as well as a pension crisis in most advanced economies, understanding the characteristics of the labour supply function of the elderly have taken on a new significance. Even in developing countries, with labour surplus economies, this is a major issue as these poor countries try to build a pension scheme with at least a minimum amount of state provision for the elderly. What motivates retired people to enter or continue in the labour force is the focus of our analysis. We use panel data from Korea which is an interesting country since it transited from developing to developed economy status within the last few decades and therefore exhibits characteristics of both underdevelopment and economic advancement. The econometric methods include probit models of: pooled data; panel data with random effects; and 2SCML, to allow for possible endogeneity bias induced by the self-declared health status of the elderly. We stress the crucial importance of pecuniary and non-pecuniary factors in determining labour supply of the elderly. Contrary to expectations, non-pecuniary factors such as health status are crucial in the decision-making process of whether to work or not to work for the elderly.
This paper offers an explanation of the use of mandatory-retirement clauses in labor contracts. It argues that the date of mandatory retirement is chosen to correspond to the date of voluntary retirement, but the nature of the optimal wage profile results in a discrepancy between spot wage and spot VMP (value of the worker's marginal product). This is because it is preferable to pay workers less than VMP when young and more than VMP when old. By doing so, the "agency" problem is solved, so the contract with mandatory retirement is Pareto efficient. A theory of agency is presented and empirical evidence which supports the hypothesis is provided.
This study analyzes the impact of unionism on fringes paid to production workers, using data on individual establishments. It compares fringe expenditures in establishments having the same level of compensation per hour and finds that unionism raises the share of compensation allotted to fringes, particularly to pensions, vacation pay, and life, accident, and health insurance. In addition, since unionism also raises the straight-time wage rate, itself a prime determinant of expenditures on fringes, unionism has a very sizeable impact on total fringe expenditures, as well as on the fringe share of compensation. The union fringe effect exceeds, in percentage terms, the union wage effect and is sufficiently large to suggest that standard union wage studies understate the union effect on total compensation. The study also compares the fringe expenditures of production and non-production workers within the same establishment, controlling for within-establishment pay policies. The findings suggest that the presence of a union among production workers in an establishment may have a sizeable spillover effect on the fringes paid nonproduction workers in that establishment. (Abstract courtesy JSTOR.)
Examination of wage differences through estimation of separate wage equations for union and non-union white male workers in the United States in 1973. Sample and basic wage equations; Analysis of findings; Computations of the union/non-union wage differential; Estimation of wage equations for workers in manufacturing industries. (Abstract copyright EBSCO.)