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142 Monthly Lab. Rev. 1 (2019)

handle is hein.journals/month142 and id is 1 raw text is: 

               LaoVIU                                                                    BLS

                                             BLS                                     January 2019

Can unions significantly reduce wage inequality?

Depends on whether you're in the public or

private sector

Maureen  Soyars Hicks

As income inequality has increased in many developed countries, economists have been confronted with a
question: what is causing the wide gap in wages between the rich and everyone else? One common line of
inquiry has been whether there is any link between the decline in union membership and the rise in income
inequality. According to Unions and wage inequality: the roles of gender, skill, and public sector
employment (National Bureau of Economic Research, Working Paper 25313, November 2018), there is not a
simple answer to such a complex issue. Economists David Card, Thomas Lemieux, and W. Craig Riddell find
that there are striking differences between the private and public sectors in the effects of unionization on male
and female wage inequality-differences that have become more pronounced over time as private and public
sector unionization have diverged.

Using the U.S. Current Population Survey and the Canadian Labour Force Survey together with supplements to
these surveys, the authors observed that in the United States, the rate of unionization has fallen in the private
sector (to 7 percent in 2017), while the rate in the public sector has increased (to 39 percent in 2017). These
trends were essentially the same in Canada: private sector unionization has been dropping for decades and
was just 16.4 percent in 2017, while public sector unionization has risen and was 75.5 percent in 2017. The
authors note that with the steady decline in private sector unionization and rising influence in the public sector,
half of all unionized workers are now in the public sector.

This shift has also led to profound changes in the composition of the unionized workforce. Whereas union jobs
were historically concentrated among low-skilled men in private sector industries, recent years have shown a
noteworthy increase in the share of women among unionized workers. Currently, approximately half of union
employees in the United States and Canada are women. For example, in the United States, the percentage of
males in private sector labor unions fell from 31 percent in 1973 to 9 percent in 2015, while it rose in the public
sector from 29 percent to 43 percent over the same period. Similarly, the percentage of women in private sector
unions declined from 13 percent in 1973 to 6 percent in 2015, while the rate in the public sector rose from 18
percent to 41 percent.

So what effect have these changes in unionization had on wage inequality? The authors note that, on the whole,
unions reduce economy-wide wage inequality by less than 10 percent. However, union impacts on wage
inequality in the public and private sectors differ quite a lot. In the private sector, distributions of union and
nonunion wages are very similar. On average, private sector unions reduce male inequality by 1.5 percent in the

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