Effects of Occupational Licensing and Unions on Labour Market Earnings in Canada

Abstract

Using longitudinal data from the Canadian Survey of Labour and IncomeDynamics from 1999 to 2011, the article compares the pay and benefits of licensed and unionized workers. In a cross section of respondents and using ordinary least squares estimates, it finds a pay premium of 0.155 log points for those with an occupational licence compared to those without one; the comparable union wage premium is slightly more than half, that is 0.085 log points. Fixed-effects estimates go in the opposite direction (0.028 and 0.046 log points for licensing and unionization, respectively), suggesting the existence of unobservable factors correlated with licensing and union status. Unionized workers are more likely to access standard benefits, such as medical insurance and pension plans, but licensed workers benefit little from their licensing status in access to benefits. Finally, union workers are significantly less likely to receive incentive pay, such as profit sharing, while the association between occupational licensing and incentive pay is close to zero and statistically insignificant.

Immigrant–non‐immigrant wage differentials in Canada: A comparison between standard and non‐standard jobs

“…Many factors that the immigrant assimilation research literature identifies as helping immigrants are absent in non‐standard jobs. For example, presence of unions and occupational licensing were found by Zhang (2019) to improve immigrant labour market outcomes such as employment and earnings. Gomez et al (2015) found that immigrants benefit proportionally more than Canadian‐born workers from employment in a regulated occupation.…”

Evolution of Union Wages and Determinants

“…While this quasi-natural experiment design is advantageous due to its counterfactual approach and exposition of the short-run effects of unionization at the microlevel, it has its limitations. Union elections won by a large margin may result in a more substantial wage premium (Lee and Mas 2012), possibly due to weaker bargaining power for unions that barely win certification (Zhang 2019), but cannot be examined using RDD by its definition. The RDD approach also only studies the short-run after a union election (Rios-Avila and Hirsch 2014) and is not applicable to many countries on account of heterogeneity in labor market institutions across jurisdictions (Breda 2015).…”

“…Second, as mentioned previously, unions affect a number of labor market outcomes, some of which are worth summarizing here. Unions have been found to increase nonwage benefits (Freeman 1981;Zhang 2019) such as medical insurance, pension plan coverage, and paid holiday leave. Some research suggests that unions' effect on benefits is relatively larger than their effect on wages (Forth and Bryson 2019;Freeman and Medoff 1984;Knepper 2020).…”

“…This chapter reviews the union wage premium literature, paying attention to how union wage differentials have evolved over time, as well as the factors that cause them. It is worth noting that wages are just one facet of the compensation package, but studies on unions' impact on other facets are comparatively quite scarce (Forth and Bryson 2019;Zhang 2019). As this is a very prolific literature, wage effects will be emphasized, as will more recent studies from 2010 onwards to reflect the current state of research and more advanced research methodology.…”

Anti-competitive and regulatory barriers in the United States labour market

“…In 2014, approximately 11% of Canadian workers could be identified as licensed (Zhang, 2019). Occupational regulation is highly decentralised, mainly at the provincial level.…”