The Interindustry Structure of Unionism, Earnings, and Earnings Dispersion

Abstract

This study examines the relationship between unionism and earnings dispersion within U.S. manufacturing and nonmanufacturing industries. The author hypothesizes not only that unionism narrows earnings dispersion, as others have shown, but also that the dispersion in earnings, reflecting the degree of worker homogeneity, influences the level of unionism. Estimation of a three-equation model, using 1970 three-digit industry data, provides evidence regarding the simultaneous determination of unionism, earnings, and earnings dispersion within U.S. industries. The estimated equalizing effects of unionism on within-industry earnings distributions are found to be significant both in the manufacturing and nonmanufacturing sectors, the size of these estimates increasing after accounting for simultaneity. In addition, the dispersion in earnings does appear to affect the level of unionism, although the evidence on this point is ambiguous.