Abstract
This paper explores the factors behind the disappearance of the manufacturing wage premium—the additional pay a manufacturing worker earns relative to a comparable nonmanufacturing worker. With substantially larger declines across union members, we quantify the role of unionization by exploiting the heterogeneity in membership status across manufacturing industries. We find that the decline in union membership explains more than 70 percent of the decline in the wage premium since the 1990s for union members but does not affect nonunion premia. Our findings suggest that the erosion of “good” manufacturing jobs has contributed to the increase in overall wage inequality.
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