UNION WAGE PREMIUMS IN AN INSTRUMENTAL VARIABLES FRAMEWORK

A number of studies have used simultaneous-equations models, and the Inverse-Mills Ratio procedure in particular, to calculate union wage premiums. No study, however, has attempted to build up and extend results using an innovative instrumental variables (IV) model recently developed by Duncan and Leigh. This article fills this void by not only using the IV model to update Duncan and Leigh's estimates, but also computes union wage premiums for as many as 24 different groups of workers (as opposed to only five by Duncan and Leigh). IV estimates are also compared with results computed from the more traditional IMR and single-equation OLS models.