I can’t say I followed this debate very closely, still this paper may settle some of the outstanding questions about public sector unions and wages and bargaining power.
This paper seeks identify the eﬀect that public sector unions have on compensation. Speciﬁcally, I look at the compensation premium associated with teachers’ unions in Wisconsin. In 2011, Wisconsin passed a landmark law (Act 10) which signiﬁcantly lowered the bargaining power of all public sector unions in the state. Using an event study framework, I exploit plausibly exogenous timing differences based on contract renewal dates, which caused districts to be ﬁrst exposed to the new regulations in different years. I ﬁnd that the reduction in union power associated with Act 10 reduced total teacher compensation by 8%, or $6,500. Roughly two-thirds of this decline is driven through reduced fringe beneﬁts. The analysis shows that the most experienced and highest paid teachers beneﬁt most from unionization. I supplement the event study approach with synthetic control and regression discontinuity methods to ﬁnd that regulatory limits on contract terms, rather than other mechanisms such as state ﬁnancial aid cuts or union decertiﬁcation, are driving the results.