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Edited by John T. Addison and Claus Schnabel
8 Unions and the wage structure David Card, Thomas Lemieux and W. Craig Riddell 1. Introduction This chapter discusses the impact of unions on the wage structure – the way in which wages vary systematically with characteristics such as education, age, gender, or occupation. Do unions widen or narrow pay diﬀerentials between the skilled and unskilled, between men and women, or between blue-collar and white-collar workers? Is the net eﬀect of unions to increase or decrease overall wage inequality? These questions have long intrigued social scientists. Recently, they have attracted renewed interest as analysts have struggled to explain the rise in earnings inequality in several industrialized countries. The fact that two of the countries with the largest declines in unionization – the USA and the UK – also experienced the biggest increases in wage inequality raises the question of whether these two phenomena are linked. If so, how much of the growth in earnings inequality can be attributed to the fall in union coverage? The impact of unions on the wage structure depends on the industrial relations system – the social, political, legal, institutional and economic environment in which unions operate. Countries vary widely in their industrial relations systems, and these diﬀerences potentially aﬀect both the goals of unions, and their ability to achieve these goals. In some countries unions exert considerable inﬂuence on the political process. By supporting minimum wage or pay equity legislation, for example, unions may be able to alter the wage structure in the economy....
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