The Union Wage Effect at the Dawn of the Great Levelling - Evidence from Interwar Sweden

Gustafscenen Session 3: Labour, living standards and inequality organized by Erik Bengtsson, Kathryn Gary, Tobias Karlsson, Malin Nilsson and Jakob Molinder


William Skoglund


In this paper, I use a new plant-level dataset to investigate the relationship between wages and the regional strength of unions. Using a shift-share or ’Bartik’ instrumental variables approach, I disentangle the causal effect of union strength on wage levels. I find statistically and economically significant, heterogeneous union wage effects for men with the bottom of the distribution being impacted by union density and the top two-thirds being unaffected. I find a negative effect around the median for women and argue that unions, in general, were uninterested in the issues for women and were organizations mostly for men, by men. The paper contributes to the literature by providing the only evidence of a union wage effect in Sweden and, perhaps, the earliest union wage effect found anywhere–highlighting the importance of unions in shaping labor market outcomes in the early 20th century and showing that union wage effects have to be understood in their historical context.


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