Presented by Rhys Davies
This paper presents new evidence on long term trends in the union pay premium for Great Britain. Based upon data from the Labour Force Survey for 2001 to 2021, regression analysis reveals that the average premium in pay associated with union membership is estimated to be approximately 5%. The premium is observed among those employed both in the private and public sectors and separately for men and women. It is relatively robust to the inclusion of controls for employee characteristics, workplace characteristics and local labour market conditions of varying details. Non-parametric estimates derived via Propensity Score Matching also produce results that are similar in size to those based upon standard regression models.
Annual analysis of the union pay premium however suggests that the relative earnings of union members has declined since 2016, to the extent that by 2021 it had vanished. Multivariate analysis confirms that this decline cannot be explained by changes in the characteristics of jobs held by union members or other factors that influence earnings. The decline is particularly apparent within the private sector. Within a tight labour market created by Brexit and increased levels of economic inactivity since the pandemic, the increased earnings associated with union membership appears to have diminished in recent years.
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