Draft not to be quoted Wage Differentials between Union and Non-Union Workers: An Econometric Analysis S.Madheswaran, Associate Professor Institute for Social and Economic Change Nagarbahvi (Post) Bangalore 560 072, India Email:
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[email protected] and K.R.Shanmugam Associate Professor Madras School of Economics Gandhi Mandapam Road, Chennai, India -------------------------- Paper prepared for presentation in the Far Eastern Meeting of the Econometric Society at Yonsei University, Seoul, Korea, during July 4-6, 2003. Wage Differentials between Union and Non-Union Workers: An Econometric Analysis S.Madheswaran* and K.R.Shanmugam** *Associate Professor, Institute for Social and Economic Change,Bangalore, India **Associate Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai, Abstract It is increasingly recognized that institutional factors such as trade unions do play a dominant role in determining the levels of wages, standard of working conditions. This is more pronounced in the industrial sector of developing economies. The role of labor organizations in the labor market has been firmly identified especially in relation to wage bargaining with studies focussing mainly on the advanced industrial economies. In the Indian context, there exist a number of studies on the evolution of the structure; functions and aspects of trade unions; but the empirical analysis of the impact of trade union on wages are rather limited. In this backdrop, this paper attempts to analyze the impact of trade union on wages using a survey covering blue collar male workers employed in manufacturing industries in Chennai district of Tamil Nadu, in southern part of India. We have estimated earnings functions for union and non-union workers separately.