TY  - JOUR
AU  - Neumark,David
AU  - Wachter,Michael L.
TI  - Union Threat Effects and Nonunion Industry Wage Differentials
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4046
PY  - 1992
Y2  - April 1992
UR  - http://www.nber.org/papers/w4046
L1  - http://www.nber.org/papers/w4046.pdf
N1  - Author contact info:
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA  92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu

Michael L. Wachter
Department of Economics
Steinberg-Dietrich Hall
University of Pennsylvania
Philadelphia, PA   19104
Tel: NA
AB  - We investigate the impact of union strength on changes in nonunion wages and employment. The prevailing model in this area is the threat model, which predicts that increases in union strength cause increases in nonunion wages and decreases in nonunion employment. In testing the threat model, we are also testing two alternatives, the crowding and complements models. In contrast to the prediction of the threat model, decreases in the percent organized (reflecting a declining union threat) are associated with increases in the nonunion wage. Furthermore, increases in union wages appear to decrease, rather than to increase, nonunion wages. Evidence on the determinants of intra-industry variation in nonunion wage premia is somewhat more consistent with the crowding model and is strikingly consistent with the complements model of union and nonunion wage determination. Further evidence on the determinants of intra-industry variation in nonunion employment is consistent with the complements model and the threat model; movements in nonunion industry employment are negatively related to changes in proxies for union strength. Thus, the combined evidence supports the complements model, but neither the threat model nor the crowding model.
ER  -