Unionization and Wage Inequality
New research by FOS Affiliate Kory Kroft and co-authors, published in American Economic Review: Insights, examines the impact of unionization on the salaries of faculty at Canadian universities.
The decline of organized labor is frequently linked to widening income gaps, yet credible evidence on how unions affect the full distribution of wages remains scarce. It has been difficult for studies to distinguish compositional effects (the systematic differences of workplaces that tend to select into unions) from causal effects and to avoid measurement errors when relying on changes to union status over time.
In a paper in American Economic Review: Insights, Michael Baker, Yosh Halberstam, Kory Kroft, Alexandre Mas, and Derek Messacar address these challenges by using administrative salary records for full-time faculty at Canadian universities between 1970 and 2022.
Overall, the findings indicate that unionization raised faculty salaries and compressed their distribution by lifting the lowest salaries. Ultimately, the authors trace this compression to contractual salary floors negotiated by the unions, which appeared in nearly all of the first contracts they examined.