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Thesis

Estimating trade union membership determinants and wage effects using alternative econometric specifications -PhD thesis-

Authors

Publication date

2008

Abstract

This Thesis investigates the issue of the simultaneous determination of union membership status and wage rates. We explore the determinants of individual union propensity and use an endogeneity correction methodology to estimate the wage impact of UK trade unions in an era of declining unionisation.
The second Chapter surveys the estimation methodologies that have been employed in the union wage effects literature to deal with the problem of endogeneity of union membership status.
In the third Chapter we analyse the determinants of union membership in the UK using data from the British Household Panel Survey (BHPS), 1991-2003. Employing three alternative methodologies to control for the problem of initial conditions we find that union membership remains persistent even after controlling for the unobserved effect. There is evidence of a considerable correlation between the unobserved individual heterogeneity and the initial condition. Ignoring this overstates the degree of state dependence of union membership greatly. The extent of state dependence in union membership status is notably higher in the (1991-1996) period estimates and appears to be more pronounced in the case of male employees for the entire period under analysis. The second period estimates reveal that unobserved heterogeneity has a more prominent impact in determining future unionisation probability versus past union membership.
The fourth Chapter employs an endogeneity correction methodology to estimate the union wage impact in the UK during 1991-2003. Using a dynamic model of unionism and wage determination we find that the unobserved factors that influence union membership also affect wages. The estimates suggest that UK trade unions still play a non-negligible, albeit diminishing, role in wage formation. The estimated union wage differentials are consistent with the recent estimates of Blanchflower and Bryson (2007). According to our preferred estimates the male union wage effect has fallen from 9.2% in the (1991-1996) estimates to 5.8% in (1997-2002), while the respective female union wage differential has fallen from 17.6% to 11.5%. The observed decrease in the union wage impact is in agreement with our expectations following the successive legislative changes (1980, 1982, 1988 and 1990 Employment Acts) targeted towards weakening the bargaining strength of UK trade unions.

Subjects

Econometrics, Labour Economics, and Wages And Earnings

Notes

Available through British Library EThOS: http://ethos.bl.uk/; not held in Res Lib - bibliographic reference only

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