Working Paper: NBER ID: w21638
Authors: Richard Freeman; Eunice Han; David Madland; Brendan V. Duke
Abstract: This paper examines unionism’s relationship to the size of the middle class and its relationship to intergenerational mobility. We use the PSID 1985 and 2011 files to examine the change in the share of workers in a middle-income group (defined by persons having incomes within 50% of the median) and use a shift-share decomposition to explore how the decline of unionism contributes to the shrinking middle class. We also use the files to investigate the correlation between parents’ union status and the incomes of their children. Additionally, we use federal income tax data to examine the geographical correlation between union density and intergenerational mobility. We find: 1) union workers are disproportionately in the middle-income group or above, and some reach middle-income status due to the union wage premium; 2) the offspring of union parents have higher incomes than the offspring of otherwise comparable non-union parents, especially when the parents are low-skilled; 3) offspring from communities with higher union density have higher average incomes relative to their parents compared to offspring from communities with lower union density. These findings show a strong, though not necessarily causal, link between unions, the middle class, and intergenerational mobility.
Keywords: unionism; middle class; intergenerational mobility
JEL Codes: J31; J51; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Union workers (J51) | middle-income group (D31) |
| Decline of unionism (J51) | shrinking middle class (D31) |
| Higher union density in community (J50) | higher average income offspring (J19) |
| Union parent (J51) | higher income offspring (I24) |