Differences in Decline: Quantile Regression Analysis of Union Wage Differentials in the United Kingdom, 1991-2003

47 Pages Posted: 28 Apr 2009

See all articles by Alejandra Manquilef-Baechler

Alejandra Manquilef-Baechler

University of Warwick

Wiji Arulampalam

University of Warwick - Department of Economics; IZA Institute of Labor Economics

Jennifer C. Smith

University of Warwick - Department of Economics

Abstract

Wage premia related to union membership and coverage are examined over 1991-2003, a period involving first decline, then stabilization, of unionization. Differences in union premia across workers and over time are studied using individual-level British Household Panel Survey data and quantile regression techniques allowing for endogeneity of the membership decision. Raw differentials suggest the presence of large positive membership and coverage premia that are stronger at the bottom of the wage distribution in both private and public sectors. After controlling for other factors influencing wages, union asymmetries are no longer apparent in the private sector. When endogeneity of union membership is taken into account, the private sector union wage premium disappears, indicating that individuals positively select into unions. In contrast, the public sector total union wage premium remains significant - entirely due to a coverage effect; it is stronger at the bottom among males, while for females the premium is constant across workers and substantial over the whole period, reflecting the continuing strength of public sector unions. Once we control for endogeneity, the membership premium is nowhere significant; there is no free rider puzzle in the private sector, as there is no coverage premium, but the puzzle persists for the public sector.

Keywords: union membership premium, quantile regression, endogenous union membership

JEL Classification: C2, J31, J51

Suggested Citation

Manquilef-Baechler, Alejandra and Arulampalam, Wiji and Smith, Jennifer C., Differences in Decline: Quantile Regression Analysis of Union Wage Differentials in the United Kingdom, 1991-2003. IZA Discussion Paper No. 4138, Available at SSRN: https://ssrn.com/abstract=1395245

Alejandra Manquilef-Baechler (Contact Author)

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Wiji Arulampalam

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
01203 523471 (Phone)
01203 523032 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jennifer C. Smith

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
+44 24 7652 3469 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
51
Abstract Views
529
rank
422,301
PlumX Metrics