Union Density, Productivity, and Wages
Erling Barth, Alex Bryson, Harald Dale-Olsen
We exploit changes in tax subsidies for union members in Norway to identify the effects of changes in firm-level union density on productivity and wages. Increased deductions in taxable income for union members led to higher membership rates and contributed to a lower decline in union membership rates over time in Norway than in other countries. Accounting for selection effects and the potential endogeneity of unionization, the results show that increasing union density at the firm level leads to a substantial increase in both productivity and wages. The wage effect is larger in more productive firms, consistent with rent-sharing models.