Union Wage Practices and Wage Dispersion within Establishments

This study uses establishment level data to examine the effect of unionism on the wage structure within establishments. The major finding is that unionism substantively reduces within-establishment dispersion of wages, in part through explicit wage practices, such as single rate or automatic progression modes of wage payment as opposed to merit reviews and individual determination. Dispersion of wages between organized plants is reduced compared to dispersion of wages between unorganized plants, but by more modest amounts. Overall, the evidence suggests a major role for explicit union wage policies on dispersion of wages within firms and in the economy as a whole.