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IZA Discussion Paper No. 18065
August 2025
What Do (Thousands of) Union Do? Union-Specific Pay Premia and Inequality

We study the role of union heterogeneity in shaping wages and inequality among unionized workers. Using linked employer-employee data from Brazil and job moves across multi-firm unions, we estimate over 4,800 union-specific pay premia. Unions explain 3–4% of earnings variation. While unions raise wages on average, the standard deviation in union effects is large (6-7%). Validating our approach, wages fall in markets with higher vs. lower union premia following a nationwide right-to-work law. Linking premia to detailed data on union attributes, we find that unions with strike activity, collective bargaining agreements, internal competition, and skilled leaders secure higher wages. High-premium unions compress wage gaps by education while the average union exacerbates them. Post right-to-work, however, worker support for high-premium unions falls when between-group bargaining differentials are large. Our findings show that unions are not a monolith—their structure and actions shape their wage effects and, consequently, worker support.

Kommunikation
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Netzwerkkoordination
Christina Gathmann
christina.gathmann@liser.lu

Das IZA@LISER-Netzwerk ist eine weltweite Gemeinschaft für exzellente Forschung in der Arbeitsmarktökonomie und angrenzenden Fachgebieten. Nach dem Wechsel von Bonn wird das Netzwerk nun am Luxembourg Institute of Socio-Economic Research (LISER) koordiniert.

Über das IZA@LISER Network
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