Nonunion Wage Rates and the Threat of Unionization

Using CPS data for 1977–2002, the author investigates the extent to which the threat of union organization increases nonunion wages and reduces the union/nonunion wage differential. The results are mixed. Estimates employing the predicted probability of union membership as a measure of the union threat show no important link between the union threat and either nonunion wages or the union wage gap. Estimates focusing on two states' introduction of right-to-work laws, which arguably affect the threat of union organization independently of changes in labor demand, show that in one state the law was associated with a statistically significant drop in nonunion wages. Finally, an analysis of wage data for three industries that underwent deregulation—another natural experiment in which labor demand changes are unlikely to have been a complicating factor—yields stronger evidence of threat effects on nonunion wages than do either of the other two analyses.

Effects of Labor Legislation and Industry Characteristics on Union Coverage in Canada

The authors investigate the determinants of union coverage using 1986 cross-section data on Canadian workers. Larger firm size, larger establishment size, and higher injury rates increase the probability of union coverage. Industry concentration, import penetration, and the substitutability of labor do not affect coverage through their impact on the union-nonunion wage differential, but concentration increases the probability of coverage through a mechanism unrelated to the wage differential. Mandatory checkoff provisions increase the probability of coverage, but the estimated effect is barely significant. Restrictions on replacement workers and interprovincial differences in automatic certification provisions have statistically insignificant effects. Finally, the results are sensitive to treating some industry characteristics as endogenous (that is, jointly determined with union coverage and union and nonunion wages)—a treatment not used in other studies.