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Do Unions Increase Labor Shares? Evidence from US Industry-Level Data

Do Unions Increase Labor Shares? Evidence from US Industry-Level Data We explore the relationship between union membership rates and labor shares using panel data on 35 industries, spanning the entire US economy, for the years 1983–2005. For the full sample, a standard deviation increase in union membership rates is associated with an increase in an industry’s labor share of about 10%. Starting from the mean labor share in our sample (0.614), this effect amounts to about 6 percentage points. However, the effect is weaker and not statistically significant for manufacturing industries. We control for the capital-to-output ratio in all of our estimations, and the results are consistent with an elasticity of substitution between capital and labor that is less than unity. As such, the positive union effect on labor share is consistent with either the right-to-manage or the efficiency bargaining model of unions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Eastern Economic Journal Springer Journals

Do Unions Increase Labor Shares? Evidence from US Industry-Level Data

Young, Andrew; Zuleta, Hernando
Eastern Economic Journal , Volume 44 (4) – Dec 9, 2017
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References (49)

Publisher
Springer Journals
Copyright
Copyright © 2017 by EEA
Subject
Economics; Economics, general; Economic Theory/Quantitative Economics/Mathematical Methods
ISSN
0094-5056
eISSN
1939-4632
DOI
10.1057/s41302-016-0086-6
Publisher site
See Article on Publisher Site

Abstract

We explore the relationship between union membership rates and labor shares using panel data on 35 industries, spanning the entire US economy, for the years 1983–2005. For the full sample, a standard deviation increase in union membership rates is associated with an increase in an industry’s labor share of about 10%. Starting from the mean labor share in our sample (0.614), this effect amounts to about 6 percentage points. However, the effect is weaker and not statistically significant for manufacturing industries. We control for the capital-to-output ratio in all of our estimations, and the results are consistent with an elasticity of substitution between capital and labor that is less than unity. As such, the positive union effect on labor share is consistent with either the right-to-manage or the efficiency bargaining model of unions.

Journal

Eastern Economic Journal – Springer Journals

Published: Dec 9, 2017

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