Are There Gains to Joining a Union? Evidence from Mexico

Abstract

Union density in Mexico has been in decline since the 1980s. This article provides evidence on the worker compensation gains (losses) made by males upon joining (leaving) a union. These are estimated using a nationally representative labour market survey covering 2005q1–2016q1. The transitions between non‐union and union status are investigated using a difference‐in‐difference estimator. The findings suggest that joining a union is associated with modest wage gains, contrary to what the literature has shown for most industrialized nations. However, in contrast to this, some union leavers are found to experience a decrease in wages. This article also contributes to the wider literature by providing the first estimates of the longitudinal gain (loss) associated with joining (leaving) a union with respect to non‐wage benefits. The findings show joining (leaving) a union increases (decreases) the probability of being in receipt of legally guaranteed benefits such as bonuses and paid holidays. This suggests that although union density may be in decline, unions still have an important role to play in voicing worker's preferences with respect to compensation and ensuring that employers comply with the law.