Abstract

This study assesses the impact of trade unions on labor's share of income. It improves on previous tests by accounting for possible alternative explanations of an observed positive relationship between union coverage and labor's share. Using three-digit cross-sectional data on United States manufacturing industries from 1973–1975 and 1983–1985, the analysis accounts for both establishment size and worker characteristics, and conducts tests across different time periods. Union density and establishment size are found to have a positive effect on labor's share.

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