Labor Market Institutions and the Distribution of Wages: The Role of Spillover Effects
This paper examines the role of spillover effects of minimum wages and threat effects of unionization in changes in wage inequality in the United States between 1979 and 2017. A distribution regression framework is introduced to estimate both types of spillover effects. Threat effects double the contribution of de-unionization to the increase in male wage inequality. Spillover effects magnify the explanatory power of declining minimum wages to two-thirds of the increase in inequality at the bottom end of the female wage distribution.
This paper was first prepared for a conference in honor of John DiNardo held at the University of Michigan on September 28-29, 2018. David Card, Henry Farber, David Lee, Larry Mishel, and several workshop participants provided useful feedback on an earlier version of the paper. We would like to thank the Social Science and Humanities Research Council of Canada and the Bank of Canada Fellowship Program for research support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Nicole M. Fortin & Thomas Lemieux & Neil Lloyd, 2021. "Labor Market Institutions and the Distribution of Wages: The Role of Spillover Effects," Journal of Labor Economics, vol 39(S2), pages S369-S412.