Union Wage Differentials in the Face of Changes in the Economic and Legal Environment

This paper examines changes in union wage differentials in Britain between 1980 and 1984 on the basis of two comparable establishment-level data sets. This period saw considerable economic and legislative change with potential effects on the outcomes of collective bargaining. Despite these changes, the mean differential has little change between these two years, and what there is is attributable to compositional changes, such as the shift away from the manufacturing sector and the downward shift in the establishment size distribution. The impact of the changes in unemployment and union coverage that took place is found to be minimal.