Gosling, Amanda; (1998) Wages, Trade Unions and the Labour Market. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This thesis examines the links between unions, labour market outcomes and changes in the structure of demand for labour. It is split up into three self contained sections. The first looks at the determination of union presence in the private sector workplaces. Given the decentralised structure of wage bargaining in the U.K industrial relation system, the focus is on the presence of a union recognised for the purposes of bargaining over pay and conditions at the workplace. This is found to be determined historically by the characteristics of the labour and product market at the time the workplace is created. This means that unions may still have influence over wages in some industries and markets where their current relative power is weak. It is also shown that the presence of a recognised union at the workplace is the crucial determinant of union membership. Variations in union density, conditional on union coverage, in the workplace appear to be fairly random. The second part of the thesis looks at the relationship between unions and the structure of wages. It presents results suggesting that wage differentials between and within groups are narrower in the union than in the non union sector. It then exploits the finding that union presence in the workplace is determined separately (at a different time) from wages to test whether unions actually alter the wage policies in workplaces or whether negotiations only take place when they are deemed by management to have no effect. It is shown that part of the "sword of justice" role of trade unions, compressing wage differentials amongst semi-skilled workers can be explained by the different composition of the union sector. There still remains some evidence, however, that unions do compress the wage distribution. The last part of the thesis looks directly at the recent changes in the distribution of wages. It is shown that increases in the return to education can explain about half the overall increase in wage inequality and that there has been a sharp drop in the relative wages of new entrants into the labour market without post compulsory schooling. It is also shown that the decline in trade union coverage can explain a significant part of this increase in inequality, although it is accepted that economic factors (such as changes in technology) might have caused both the fall in union presence and the rise in wage inequality. Finally a comparison with West Germany from 1984-1992 reveals the importance of other labour market institutions such as the education and training system in determining the response of an economy to changes in the structure of demand.

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