The Surprising Impacts of Unionization: Evidence from Matched Employer-employee Data∗

Using administrative data matching individual worker earnings to employers in a regression discontinuity design based on close union representation elections, this study presents new evidence on the impacts of unionization on establishment and worker outcomes. The paper first shows evidence that close union elections are subject to nonrandom selection, with large discontinuities in pre-election characteristics at the majority threshold. Estimates accounting for this selection show, perhaps surprisingly, that unionization significantly and substantially decreases establishment-level payroll, employment, average worker earnings at the establishment, and the probability of establishment survival. Estimates show the decreases in payroll and earnings are driven by union impacts on the composition of workers at unionization establishments, with older and higher-paid workers more likely to leave and younger workers more likely to join or stay. Worker-level effects on the earnings of workers who stay are small. The distinction between the large negative establishment-level effects and small worker-level effects is interpreted in a model of employer and employee selection into union jobs. JEL Codes: J01, J51 ∗This research uses data from the Census Bureau’s Longitudinal Employer Household Dynamics Program, which was partially supported by the following National Science Foundation Grants: SES-9978093, SES-0339191 and ITR0427889; National Institute on Aging Grant AG018854; and grants from the Alfred P. Sloan Foundation. Any opinions and conclusions expressed herein are those of the author and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. The author is indebted to JP Ferguson, Jim Davis, Javi Miranda, and Kristin McCue for help with the data. The author also gratefully acknowledges support from NSF Grant SES-0922355. Word count (text and appendix): 7,973. †181 Faculty Office Building, Provo, UT 84602, Fax: (801) 422-0194, Tel: (801) 422-4049, E-mail: [email protected].