The Effect of Unions on Wage Inequality in the U.S. Labor Market

Abstract

This study uses Current Population Survey micro data for 1973–74 and 1993 to evaluate the effect of changing union membership on trends in male and female wage inequality. Unionization rates of men fell between the two sample periods, with bigger declines among lower skill groups. These trends account for 15–20% of the rise in male wage inequality. Union membership rates of low-wage women also declined, while unionization increased among higher-wage women. On balance, shifting unionization accounts for very little of the rise in female wage inequality. Economy-wide trends in unionization mask a sharp divergence between the private sector, where unionism was declining, and the public sector, where it was rising. Comparisons across sectors suggest that unionization substantially slowed the growth in wage inequality in the public sector.