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The union membership wage-premium puzzle: Is there a free rider problem?

Booth, Alison L and Bryan, Mark L (2004) 'The union membership wage-premium puzzle: Is there a free rider problem?' Industrial and Labor Relations Review, 57 (3). pp. 402-421. ISSN 0019-7939

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Abstract

Economists have long suggested that labor unions suffer a free rider problem. The argument is that, since union-set wages are available to all workers covered by unions irrespective of their union status, and union membership entails costs, workers will only join if they are coerced or are offered non-wage goods that they value above membership costs. Yet U.S. and British empirical research has found a substantial union membership wage premium among private-sector union-covered workers, implying that there is no free rider problem. The authors of this study hypothesize that these findings arise due to selectivity problems associated with identifying the union membership effect. Their analysis, which uses rich data from a new linked employer-employee survey for Britain and exploits the within-establishment variation in wages as a function of individual union membership status, demonstrates that the apparent wage premium for members is illusory. Hence, a potential free rider problem remains. (Author's abstract.) (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Faculty of Social Sciences > Institute for Social and Economic Research
Depositing User: Jim Jamieson
Date Deposited: 18 Jul 2012 16:42
Last Modified: 06 Mar 2013 15:40
URI: http://repository.essex.ac.uk/id/eprint/3147

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