Unions really really don’t matter that much these days…

Idlehands points to this paper (QJE 2004) by John DiNardo and David Lee.  Neither author is a crazy right-winger, let’s hear their message:

Economic impacts of unionization on employers are difficult to estimate in the absence of large, representative data on establishments with union status information.  Estimates are also confounded by selection bias, because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages.  Using multiple establishment-level data sets that represent establishments that faced organizing drives in the United States during 1984-1999, this paper uses a regression discontinuity design to estimate the impact of unionization on business survival, employment, output, productivity, and wages.  Essentially, outcomes for employers where unions barely won the election (e. g., by one vote) are compared with those where the unions barely lost.  The analysis finds small impacts on all outcomes that we examine; estimates for wages are close to zero.  The evidence suggests that-at least in recent decades, the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers, because unions have been somewhat unsuccessful at securing significant wage gains.

Keep in mind what this means.  Once we control for endogeneity in where unions are formed, there may not be a union wage premium at all.  (A few posts ago I was telling you it was 10 to 20 percent, learn something new every day, etc.)  I learned also that when we look for the wage premium in establishment-level data, rather than household data, it usually isn’t there.  And that’s without considering the contribution and method of the authors.

I would like the highly intelligent left-wing part of the blogosphere to respond to this paper and to the Hirsch piece.  Here is an NBER version, here are other copies.  By the standards of labor economics, it does not suffice to note that the 1950s had both a more equal income distribution and more unions, or to call Western Europe a kinder, gentler place.  Those citations don’t sort out cause and effect, and in fact we do have more advanced ways of scrutinizing the data.

It is fair to say that these papers do not support the "right-wing scaremongering" scenarios about unions.  So a Kevin Drum might claim: "well, it can’t hurt to try more unions."  That still represents a significant downgrading of the original vision.  Unions are an emotional issue for the left, much as free trade and the fall of communism are so for the right.  Would it not be meaningful and rallying for the left to have the battle over collective bargaining once again?  But I am telling you all, there simply isn’t that much there.

By the way, here is Bloggingheads.tv with Megan and Matt on unions, can you imagine that?


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