Title

What Do (Thousands of) Unions Do? Union-Specific Pay Premia and Inequality

Author(s)

Ellora Derenoncourt Ellora Derenoncourt (Princeton University and NBER )

Francois Gerard Francois Gerard (University College London )

Lorenzo Lagos Lorenzo Lagos (Brown University)

Claire Montialoux Claire Montialoux (Sciences Po)

Abstract

We study the role of union heterogeneity in shaping wages and inequality among unionized workers. Using linked employer-employee data from Brazil and job moves across multi-firm unions, we estimate over 4,800 union-specific pay premia. Unions explain 3–4% of earnings variation. While unions raise wages on average, the standard deviation in union effects is large (6–7%). Validating our approach, wages fall in markets with higher vs. lower union premia following a nationwide right-to-work law. Linking premia to detailed data on union attributes, we find that unions with strike activity, collective bargaining agreements, internal competition, and skilled leaders secure higher wages. High-premium unions compress wage gaps by education while the average union exacerbates them. Post right-to-work, however, worker support for high-premium unions falls when between-group bargaining differentials are large. Our findings show that unions are not a monolith—their structure and actions shape their wage effects and, consequently, worker support.

Creation Date

2025-08

Section URL ID

Paper Number

350

URL

https://gceps.princeton.edu/wp-content/uploads/2026/07/wp350_Derenoncourt-Gerard-Lagos-Montialoux_UnionPayPremia.pdf

File Function

Jel

J31, J51

Keyword(s)

Brazil

Suppress

false

Series

3