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Selection Into Unions: The Importance of Personality and the Union Wage Premium in the United States, United Kingdom, and Germany
The union wage premium has been a topic of heated debate among labor economists for over 50 years. Researchers have attempted to account for selection of workers into unions by employing numerous, often creative econometric strategies to remove unobservable characteristics of individuals that are correlated with both wages and union membership. These methods have been largely inconclusive in determining whether OLS estimates of the union wage premium are positively or negatively biased. This study is the first to directly include measures of individuals’ personalities, characteristics formerly thought of as “unobservables,” in analyses of the union wage premium for three different countries: the United States, the United Kingdom, and Germany. Overall, the present study finds little evidence supporting the notion that including personality traits is important when estimating the union wage premium. In particular, OLS wage regressions, propensity score matching, and quantile wage regressions reveal that including personality traits does not significantly alter the size of the union wage premium estimated in each of the three models. Finally, fixed effect estimates of the union wage premium suggest that researchers should control for all possible time-invariant unobservable heterogeneity of individuals, not just personality, when estimating the union wage premium.
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