Abstract

This paper analyzes the earnings determinants in the Ghanaian manufacturing industries, focussing on the impact of unions in terms of the so-called “union relative wage effect” and the possible asymmetries of this impact across the earnings distribution. We find evidence of a union relative wage effect occurring via two distinct channels. First, we find a direct effect through individual union membership. This is the standard “union premium ” well known from the empirical literature on unions. Second, we find evidence of a spillover effect to non-union members. In addition, we find evidence of an additional union effect coming through via firm-specific training. We confirm our conjecture of an asymmetry in the union relative wage effect, unions mainly benefiting the lower end of the wage distribution. This is in line with previous research, which generally finds that unions increase income equality and reduce wage discrimination. Evaluating the nonunion sub-sample using the estimated union wage structure further establishes the presence of structural differences between the union and non-union segments of the Ghanaian manufacturing industry in that for given characteristics, a worker in the union sector earns more than a worker in the non-union sector.

Citations