Changes Over Time in Union Relative Wage Effects in Great Britain and the United States

This paper uses broadly comparable micro data at the level of the individual to examine the extent to which union relative wage effects vary across groups and through time. The main findings may be summarized as follows. a) The union wage gap averages 15% in the US and 10% in Great Britain. b) The gap is positively correlated with the (lagged) unemployment rate, and appears to be untrended in both countries. Union wages are sticky. c) The size of the wage gap varies across groups. In both the US and Great Britain the differential is relatively high in the private sector, in non-manufacturing, for manuals, the young and the least educated. d) In the US there are no differences by race or gender in the size of the differential. In Great Britain it is higher both for women and non-whites. The fact that the differential has remained more or less constant in both Great Britain and the US is a puzzle, particularly given the rapid declines in union membership in both countries. The evidence does not appear to be consistent with the widely held view that union power has been emasculated.