The Sources of the Union Wage Gap: The Role of Worker, Firm, Match, and Job-title Heterogeneity
46 Pages Posted: 21 Feb 2019
Date Written: 2018
Using matched employer-employee-contract data for Portugal – a country with near-universal union coverage – we find evidence of a sizable effect of union affiliation on wages. Gelbach's (2016) decomposition procedure is next deployed to ascertain the contributions of worker, firm, match, and job-title heterogeneity to the union wage gap. Of these the most important is the firm fixed effect, followed at some distance by union workers gaining from elevated job titles and/or more generous promotion policies. For its part, unobserved worker quality plays only a very weak role, while there is even less suggestion that improved match quality bolsters the union premium.
Keywords: union density, union wage gap, worker/form/job-title fixed effects, match quality, Gelbach decomposition, Portugal
JEL Classification: J310, J330, J410, J510, J520
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