Union dues and wage premiums

This study explores whether union wage premiums reflect compensating differences or noncompetitive rents. It is argued that if (1) there exists substantial dues variability, and (2) there is a positive wage-dues relation among union workers, at least part of the observed union premium is noncompetitive. Empirically, these two conditions are substantiated both within and across industries using the PSID microdata base. On average, 44 percent of the overall union premium is attributable to noncompetitive sources. Senior Economist, Office of Research and Evaluation, Bureau of Labor Statistics and Special Assistant for Policy, Evaluation and Research, U.S. Department of Labor. Comments are gratefully acknowledged from James Cunningham, H. Gregg Lewis, Wesley Mellow, William J. Moore, Jack E. Triplett and an anonymous referee. Points of view or opinions stated in this document do not necessarily reflect the official position or policy of the U.S. Department of Labor.