Unions and the Labor Market for Managers

52 Pages Posted: 23 Jun 2000

See all articles by Jörn-Steffen Pischke

Jörn-Steffen Pischke

London School of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

John E. DiNardo

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; National Bureau of Economic Research (NBER)

Kevin F. Hallock

Cornell University; National Bureau of Economic Research (NBER)

Date Written: May 2000

Abstract

We examine the relationship between the employment and compensation of managers and CEOs and the presence of a unionized workforce. We develop a simple efficiency wage model, with a tradeoff between higher wages for workers and more monitoring, which requires more managers. The model also assumes rent sharing between workers, managers and the owners of the firm. Unions, by redistributing rents towards the workers, lead to lower employment and lower pay for managers. Using a variety of data sets, we examine the implications of the model for the relationship between the employment and wages of managers and unionization. We find several results generally consistent with our model. (1) Both a higher fraction of unionization in an industry and region and a higher union wage differential are associated with fewer managers. (2) Managers' wages are about 5 to 7 percent lower in unionized firms. (3) For CEOs the effects are larger: a 10 percent increase in unionization reduces the pay of CEOs by 2.5 percent or more.

Keywords: Executives, managers, unions, wage structure, CEOs

JEL Classification: J31, J44, J51

Suggested Citation

Pischke, Jörn-Steffen (Steve) and DiNardo, John and Hallock, Kevin F., Unions and the Labor Market for Managers (May 2000). IZA Discussion Paper No. 150. Available at SSRN: https://ssrn.com/abstract=233901

Jörn-Steffen (Steve) Pischke (Contact Author)

London School of Economics ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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John DiNardo

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

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HOME PAGE: http://www-personal.umich.edu/~jdinardo/

National Bureau of Economic Research (NBER)

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Kevin F. Hallock

Cornell University ( email )

Ithaca, NY 14853
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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