Labor Unions and Wages in Brazil

Niels-Hugo Blunch , Washington and Lee University
Silvio H. T. Tai, Pontifícia Universidade Católica do RS

This paper estimates the union relative wage effect in Brazil. In contrast to previous studies, we pool data for several decades, so that we are able to examine the union relative wage effect for the entire period 2003-2015. By employing quantile regressions the empirical strategy incorporates the theoretical prediction that unions can be expected to be bargaining especially on behalf of the lower part of the wage distribution. At the same time, these workers also frequently are among the less skilled/less educated workers, thus highlighting at the same time the importance of upskilling/educating this segment of the Brazilian workforce. We find that the average union wage premium in the formal Brazilian labor market is substantial—and relatively constant—at about 15 percent over the entire period 2003-2015. Examining the union wage premium across rural vs. urban areas and across regions, however, reveals a much more volatile union wage premium in Brazil, once geographic disparities are taken into account.

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 Presented in Session 8. Economy, Labor Force, Education, & Inequality