The Effects of Collective Bargaining Rights on Public Employee Compensation

Abstract

Widespread public-sector unionism emerged only in the 1960s, as individual states opened the door to collective bargaining for state and municipal workers. In this study, the author exploits differences in timing of legislative reforms across states to construct estimates of the causal effects of public-sector collective bargaining rights on pay, benefits, and employment for teachers, firefighters, and police. Perhaps surprisingly, estimates that allow for state fixed effects and state-specific trends show little effect on teachers’ pay, benefits, or employment, despite significantly increasing union presence among teachers. For firefighters, the results show a substantial positive effect on wages. For police, the wage effect was more modest but the workweek was significantly shortened.