UNION NONUNION WAGE DIFFERENTIALS - INDIVIDUAL-LEVEL AND ORGANIZATIONAL LEVEL EFFECTS

The wage difference between unionized and non-unionized employees is assumed to be small in Norway (and in other Scandinavian countries), due to a high degree of unionization, spill-over effects, and standard rate policies. Previous research nevertheless indicates that there is a union member-non-member wage differential, at least for blue-collar workers. For white-collar workers the wage differential is smaller or even negative. This paper argues that in an economy with widespread spill-over and standardization, the union-non-union wage differential could be due to (1) effects of union strength (as measured by the degree of unionization) at the establishment or industry level, or (2) selection effects at the individual level. Degree of unionization or selection effects may also explain why the union-non-union wage differential is larger for blue-collar than for white-collar employees. In the private sector, the blue-collar-white-collar difference in the wage differential can be accounted for by degree-of-unionization effects. In the public sector, there seems in addition to be some positive selection for union membership. Unionization also serves to narrow the wage differential between blue-collar and white-collar workers, in part by keeping white-collar wages down.