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In cross-sectional data, the positive association between seniority and earnings is typically much stronger for nonunion workers than for union workers, a finding that seems inconsistent with the generalization that seniority is more important in the union sector than in the nonunion sector. The authors of this paper show that standard estimates of the return to seniority are likely to be biased upward due to unmeasured worker heterogeneity, job heterogeneity, or both, and they argue that this bias is likely to be larger in the nonunion sector than in the union sector. When they correct for this problem in analyzing data on male blue-collar workers for the years 1968–80, they find a larger return to seniority in the union sector than in the nonunion sector.

Returns to Seniority in Union and Nonunion Jobs: A New Look at the Evidence