American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Union Bargaining Power and the Amenity-Wage Trade-Off
American Economic Review
(pp. 4116–57)
Abstract
This paper studies how collective bargaining affects wages and amenities. By merging collective bargaining agreements (CBAs) to linked employer-employee data in Brazil, I combine rich contracted amenities with wage information. I implement a difference-in-differences strategy that exploits a court ruling enforcing CBA continuation (i.e., ultra-activity) to estimate the effects of union bargaining power. Strengthening unions raises wages and amenities without reducing employment—increasing retention despite some labor-labor substitution. A revealed-preference approach shows that amenities account for 45 percent of total compensation gains. These findings suggest that collective bargaining can offset monopsony power, but employers retain the right-to-manage workforce composition.Citation
Lagos, Lorenzo. 2026. "Union Bargaining Power and the Amenity-Wage Trade-Off." American Economic Review 116 (11): 4116–57. DOI: 10.1257/aer.20240766Additional Materials
JEL Classification
- J31 Wage Level and Structure; Wage Differentials
- J32 Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
- J42 Monopsony; Segmented Labor Markets
- J51 Trade Unions: Objectives, Structure, and Effects
- J52 Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration