Do union members receive compensating differentials? The case of employment security

This study presents evidence in the ongoing examination of whether or not union wage effects represent, in part, premiums to unpleasant aspects of unionized work. Three major empirical results follow: first, approximately one-sixth of the union differential can be attributed to the greater employment risk of union members; second, nearly one-half of the union return, and over one-third of the non-union return, to union density can simultaneously be attributed to employment risk; and, third, union members, on balance, receive larger premiums for employment risk. Such results extend previous work which argues that unions help reveal preferences about workplace public goods. In addition, they support those who contend that union density proxies other relevant omitted variables. The author thanks Randall Crane for reading an earlier draft, Mohanty Madhu for research assistance, and an anonymous referee for helpful suggestions.