Why Do Labor Unions Advocate for Minimum Wage Increases?

Arbeitspapier

Over the past decade, organized labor has played a significant role in advocating for minimum wage increases. Why might this be, given that the minimum wage may act as a substitute for the bargaining power offered by labor unions? In this paper, we study the interplay between minimum wages and union membership. We estimate that each dollar in minimum wage increase predicts a 5 percent increase (0.3 pp) in the union membership rate among individuals ages 16–40. Consistent with a classic "free-riding" hypothesis, however, we find that minimum wage increases predict declines in union membership among the minimum wage's most direct beneficiaries. Instead, increases in union membership occur among much broader groups that are not directly affected by the minimum wage.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16059

Classification and Topics

• Classification: Wirtschaft ; Social Choice; Clubs; Committees; Associations ; Positive Analysis of Policy Formulation and Implementation ; Capitalist Systems: Political Economy
• Subject: political economy ; social choice ; minimum wage ; unionization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Clemens, Jeffrey ; Strain, Michael R.
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/272686
• Last update: 10.03.2025, 11:42 AM CET