From the Fringe to the Fore : Labor Unions and Employee Compensation

Conventional wisdom suggests that labor unions raise worker wages while the newer empirical literature finds only negligible earnings effects. I reconcile this apparent contradiction by arguing that collective bargaining targets fringe benefits. Using U.S. firm-level data from the BEA Multinational Enterprise Survey and Compustat, I exploit a regression discontinuity in majority rule union elections to compare changes in employee compensation at firms whose establishment barely won a union election against those that barely lost an election. Following unionization, average employee compensation and employer pension contributions increase, which accordingly raises the labor share of compensation