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Unions and the Sword of Justice: Unions and Pay Systems, Pay Inequality, Pay Discrimination and Low Pay

Published online by Cambridge University Press:  26 March 2020

David Metcalf ,
Kirstine Hansen  and
Andy Charlwood
Andy Charlwood
Affiliation:
Centre for Economic Performance, London School of Economics
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Abstract

Dispersion in pay is lower among union members than among non-unionists. This reflects two factors. First, union members and jobs are more homogeneous than their non-union counterparts. Second, union wage policies within and across firms lower pay dispersion. Unions' minimum wage targets also truncate the lower tail of the union distribution. There are two major consequences of these egalitarian union wage policies. First, the return to human capital is lower in firms which recognise unions than in the unorganised sector. Second, unions compress the wage structure by gender, race and occupation.

Type
Research Article
Information
National Institute Economic Review , Volume 176 , April 2001 , pp. 61 - 75
Copyright
Copyright © 2001 National Institute of Economic and Social Research

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Footnotes

∗

Helpful comments on an earlier version by the following colleagues are gratefully acknowledged: Sue Fernie, Rafael Gomez, Ed Heery, John Kelly, Steve Machin and participants at the CEP Labour Workshop. Bob McNabb and Keith Whitfield kindly recalculated some of their original estimates of associations between unionisation and low pay and these are reported in tables 7 and 8. The comments of Neil Millward and an anonymous referee were particularly useful. This paper was produced under the ‘Future of Trade Unions in Modern Britain’ programme supported by the Leverhulme Trust. The Centre for Economic Performance acknowledges with thanks the generosity of the Trust.

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