Do unions always decrease wage dispersion? The case of Brazilian manufacturing

The literature on the impact of unions on wages has established that unioni zed workers earn a wage premium when compared to their nonunion counterpart s and that the dispersion of wages within the union sector is lower than in the nonunion sector. I examine the validity of these findings in the conte xt of a developing country labor market and show that unionism does create a positive wage differential but that wage dispersion is greater in the uni on sector These findings are explained by the greater variance in the chara cteristics of unionized workers, the vulnerability of nonunion workers to m arket conditions, and the structure of wage bargaining.