The Wage Effect of Compulsory Union Membership

Abstract

This study assesses the wage effect of compulsory membership clauses in union contracts. Previous industry-level studies of union wage effects have used contract coverage as the measure of unionization, that is, the proportion of workers in an industry, both members and nonmembers of unions, who are covered by collective agreements. In the wage equation estimated here, union coverage is disaggregated into its membership and covered-nonmember components. Results for a sample of 54 three-digit manufacturing industries indicate that compulsory membership clauses do enable unions to negotiate significantly greater wage increases. Results from a sample of 21 two-digit industries, however, offer less clear-cut evidence of the wage gains to be had from compulsory union membership.