Trade Unions and Wage Differentials

The economic objective of trade unions is to defend, and hope to improve, their members’ real living standards. In this chapter we consider the extent to which the structure of wage differentials relates to union power. We concentrate upon the relative wage impact of unions, which can be defined as the degree to which they raise the wages of those for whom they bargain above what would have been paid in their absence. Since the latter cannot be measured directly, most research tries to compare the level and movement of unionised wages with those paid to non-union or poorly organised workers who are comparable in other respects. 1 Before assessing this research we must discuss the theory of the potential union impact upon wage differentials.