THE EFFECT OF UNIONS ON THE STRUCTURE OF WAGES - A LONGITUDINAL ANALYSIS

This paper studies the effects of unions on the structure of wages, us ing an estimation technique that explicitly accounts for misclassifica tion errors in reported union status, and potential correlations betwe en union status and unobserved productivity. The econometric model is estimated separately for five skill groups using a large panel data se t formed from the U.S. Current Population Survey. The results suggest that unions raise wages more for workers with lower levels of observed skills. In addition, the patterns of selection bias differ by skill g roup. Among workers with lower levels of observed skill, unionized wor kers are positively selected, whereas union workers are negatively sel ected from among those with higher levels of observed skill.