Asymmetries in Union Relative Wage Effects in Ghanaian Manufacturing - an Analysis Applying Quantile Regressions

Evidence from Ghanaian manufacturing confirms that unions have an asymmetrical effect on wages: they benefit mainly the lower end of the wage distribution. The evidence also confirms the presence of structural differences between union and non-union segments: workers in the union sector of manufacturing earn more than workers in the non-union sector. Blunch and Verner analyze the determinants of earnings in Ghanaian manufacturing, focusing on the impact of unions in terms of the "union relative wage effect" and the possible asymmetries of this effect across the earnings distribution. They find evidence of a union relative wage effect occurring through two distinct channels. First, there is a direct effect through individual union membership, the standard "union premium" well known from the empirical literature on unions. Second, there is a spillover effect to non-union members. The authors also find evidence of an additional union effect that comes through firm-specific training. They confirm their conjecture that there is an asymmetry in the union relative wage effect: unions benefit mainly at the lower end of the wage distribution. This finding is in line with earlier research, which generally finds that unions reduce income inequality and wage discrimination. An evaluation of the non-union subsample using the estimated union wage structure confirms the presence of structural differences between the union and non-union segments of Ghanaian manufacturing: for given characteristics, a worker in the union sector earns more than a worker in the non-union sector. This paper - a joint product of Human Development 3, Africa Technical Families, and the Economic Policy Sector Unit, Latin America and the Caribbean Region - is part of a larger effort in the Bank to understand the links between education, training, earnings, and institutional arrangements