3/8/07

Don't keep bringing that weak ass shit

Via Drum I see that Tyler Cowen is approvingly citing a paper making the claim that unions don't produce higher wages. Well, I can't get through the pay wall[1] to read the study, but the abstract suggests an obvious problem. Here's an excerpt:
Using multiple establishment-level data sets that represent establishments that faced organizing drives in the United States during 1984-1999, this paper uses a regression discontinuity design to estimate the impact of unionization on business survival, employment, output, productivity, and wages. Essentially, outcomes for employers where unions barely won the election (e. g., by one vote) are compared with those where the unions barely lost. The analysis finds small impacts on all outcomes that we examine; estimates for wages are close to zero.

What's being compared here, then, are firms with weak unions and firms that barely beat back a unionization drive. What you would expect in such a case, or at any rate what I would expect in such a case, is that there wouldn't be much of a wage differential. This is because, first, a weak union won't be able to win much in the way of wage concessions, and, second, a firm which barely beat back a unionization drive will have an incentive to mollify workers. Cowen's suggestion that this result indicates that, "there may be no union wage premium at all" is, to say the least, a far stronger conclusion than is warranted.
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1 Though I'm sure I'll be able to work that out without much trouble tomorrow.

Addendum: And there's the paper in my inbox. I gotta tell you, having the right readers is almost as effective as having access to a university library system.

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