Union wage effects: Does membership matter?

Using a matched employer-employee data set for Norway, we exploit rare info rmation on the union status of both individual employees and their workplac es. We establish two key results. First, we find a positive effect of workp lace trade union density on the level of the individual's pay in establishm ents covered by collective agreements. Second, we find that, conditioning o n coverage, the individual union membership differential disappears after c ontrolling for establishment-level union density. The union wage effect is therefore a pure public good, with individual membership conveying a positi ve wage externality.