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The role and influence of trade unions in the OECD

The role and influence of trade unions in the OECDD avid G. Blanchflower* dartmouth college ,National Bureau of Economic Research andCentre for Economic Performance, LSER evised: August, 1996 This project was funded under purchase order from the Bureau of International LaborAffairs, Department of Labor. Points of view or opinions stated in this document do notnecessarily represent the official position or policy of the US Department of author wishes to thank Andrew Clark, Richard Freeman, Thomas Lemieux, Steve Machin,Executive SummaryIn this report the role of trade unions in the United States is compared with those in eighteen otherOECD countries using micro-data at the level of the individual.

The role and influence of trade unions in the OECD David G. Blanchflower* Dartmouth College, National Bureau of Economic Research and Centre for Economic Performance, LSE

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Transcription of The role and influence of trade unions in the OECD

1 The role and influence of trade unions in the OECDD avid G. Blanchflower* dartmouth college ,National Bureau of Economic Research andCentre for Economic Performance, LSER evised: August, 1996 This project was funded under purchase order from the Bureau of International LaborAffairs, Department of Labor. Points of view or opinions stated in this document do notnecessarily represent the official position or policy of the US Department of author wishes to thank Andrew Clark, Richard Freeman, Thomas Lemieux, Steve Machin,Executive SummaryIn this report the role of trade unions in the United States is compared with those in eighteen otherOECD countries using micro-data at the level of the individual.

2 The main findings are as The declines in union density experienced in the US in the last thirty years are not typical of theOECD. 2. There are a many similarities across countries in who belongs to a The union -nonunion wage differential in the US is approximately 15%, which has remainedroughly constant over time. unions in most other countries appear to raise wages by less. 4. unions reduce total hours of work. The size of the effect appears to be relatively small in this report the role of trade unions in the United States is compared and contrasted withthose in other OECD countries.

3 The proportion of workers represented by unions fell dramaticallyin the US in the 1970s and 1980s and to a lesser extent in the 1990s. There are only a few othercountries -- Japan, Austria and the United Kingdom are the main examples -- where this picture isreplicated. There are quite a few countries where union density has actually grown sharply overthe same time period, Finland, Denmark, Spain and Sweden. The most striking example of acountry that has followed a very different path to that of the United States is its neighbor 1993 Canadian union density was higher than it was in 1973 ( and respectively),even though many of the same firms and even the same trade unions operate in the two has unionism the United States followed a different path from that followed in other OECD countries?

4 What do unions do outside the US? To what extent and in what ways do trade unionsimpact on labor market outcomes elsewhere? The availability of micro-data files at the level of the individual for a large number ofOECD countries, which contain information on union membership plus a host of workplace andpersonal control variables, means it is now possible to compare the experience of these othercountries with that of the US. This is new. A primary concern of this report is measurement. Inwhat follows I attempt to measure the size and extent of union impacts across countries.

5 The following are the main questions that are examined in the What are the characteristics of individuals who joins unions ? How do they vary acrosscountries and through time?2. What effects do union have on the wages of their members compared to those of similar non-members?2comparisons between the two countries and to document any changes that have occurred throughtime. Perhaps unsurprisingly, there are more similarities than differences between these twocountries. Then the exercise is repeated for each of the remaining countries.

6 Due to the small sizeof the samples and the short number of years of data for these other countries, data are pooledacross years, hence little can be said about time-series properties of the various phenomenaexamined. Indeed, in a few cases there is only one year of data available ( Spain and Japan)The main findings are as follows1. The declines in union density experienced in the US in the last thirty years are not typical of theOECD. A few countries such as the UK, Austria and Japan had sharp declines in density whilstother countries experienced increases in density Canada, Denmark and Sweden.

7 2. There is only a weak relationship between movements in union density and macroeconomicperformance. 3. There is some evidence that unions did better in countries with centralized as opposed todecentralized wage setting The predominant reason behind the rapid decline in US unionism appears to be employerresistance to unions and the highly adversarial electoral process that exists to determine unionrecognition. 5. There are a many similarities across countries in who belongs to a union . Men are more likelyto be members than women but the gap appears to be narrowing over time, at least in the US andthe UK.

8 Public sector workers have a higher probability of membership than private sectorworkers as do manufacturing workers compared with those in private services. The probability ofbelonging to a union is an inverse U-shape in age maximizing at around 45 years. There is some3density are greatest in countries where the union wage differential is substantial. Examples are theUS, the UK and unions reduce total hours of work. They tend to reduce standard hours and unpaid overtimehours but increase the number of paid overtime hours.

9 Part-time work is less prevalent in unionsettings than it is in non- union settings. The size of the union -nonunion hours differential appearsto be lower in the US than it is in most of the other countries that were examined earlier ( theUK and Germany).This report has five parts. First, it sets the scene by examining briefly the differentstructures of unionism across countries and how they impact on labor market outcomes. It alsodocuments differences in union density and bargaining coverage across countries and throughtime.

10 Second, it examines the determinants of who actually belongs to a trade union across OECD countries. Third it estimates the effects of unions on relative wages. Fourth, it explores the extentto which unions are able to influence hours of work. The final part presents some conclusions andpolicy ) Structures of union movement in the United States has been in retreat during most of the Post-waryears. There are some difficulties in obtaining a consistent time series on the number of unionmembers because of changes in how the data are collected.


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