Wage Inequality, Collective Bargaining, and Relative Employment from 1985 to 1994: Evidence from Fifteen OECD Countries

Using microdata from 1985 to 1994 for fifteen OECD countries, I find that greater union coverage and membership lead to higher relative pay and lower relative employment for less-skilled men, with similar pay effects but only weak evidence of negative employment effects for less-skilled women. Greater economy-wide union coverage or membership leads to lower employment and higher relative wages for young men (with similar but weaker effects for young women), and a greater propensity to attend school for both genders. With few jobs for young people, education may have a low opportunity cost and may enhance one's employability.