Compensating Wage Differentials: An Empirical Test of Their Existence and Impact on the Union/nonunion Wage Differential
Kurish, James Brian
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https://hdl.handle.net/2142/70739
Description
Title
Compensating Wage Differentials: An Empirical Test of Their Existence and Impact on the Union/nonunion Wage Differential
Author(s)
Kurish, James Brian
Issue Date
1983
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Labor
Abstract
Much of the previous theoretical and empirical work in the area of compensating and union wage differentials has failed to consider (1) several sources of compensating wage differentials simultaneously and (2) the impact those differentials may have on union/nonunion wage differentials. If jobs which tend to be unionized have particular positive and/or negative characteristics, empirical estimation of union/nonunion differentials which fails to consider these job attributes is subject to potentially serious bias.
This study builds upon the work of Gregory J. Duncan and Frank P. Stafford (American Economic Review, July, 1980) in testing whether part of a unionized worker's wage premium can be accounted for by compensating wage differentials. Utilizing four years of the Panel Survey of Income Dynamics (PSID) and the 1977 Quality of Employment Survey (QES), in association with other data bases, allowed derivation of several variables which may be sources of compensating wage differentials. To calculate work environment indexes which reflect risk of injury and unpleasant work conditions the QES was employed. Generally, it was concluded that union workers do have poorer work environments. The PSID was used to estimate both probabilities and durations of time out of work for temporary and permanent dismissal. As expected, unionized workers had a higher probability of temporary dismissal. Total compensation (wages plus fringe benefits) for 1045 non-whites and 1809 white males in 1977 was estimated by joining of the above variables with traditionally applied variables such as educational attainment, experience, marital status, et cetera.
Separate union and nonunion estimations for non-whites and whites were performed by a two-stage process which adjusted for selectivity bias. Results from this process supported the theory of compensating differentials for whites. Non-white results, however, tended to refute the theory and may corroborate the dual labor market theory. For both race classifications, the union/nonunion compensation differential decreased when job characteristics were included. Thus, it does appear that a portion of a union worker's compensation premium can be explained by characteristics of his/her job. The contrast in findings regarding compensation differentials connotes further research should not ignore the issue of race in this segment of labor market activity.
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