Essays on Economics of Public Sector Collective Bargaining

Using the American Community Survey, the first chapter (with Eric Brunner) provides new evidence on how state collective bargaining laws affect public-sector wages. To isolate the causal effect of bargaining laws on public-sector pay, we estimate difference-in-differences models that exploit two sources of plausibly exogenous variation: 1) policy discontinuities along state borders and 2) variation within states in collective bargaining laws in states where the majority of public workers are without collective bargaining rights. Findings show that mandatory collective bargaining laws increase public-sector wages by approximately 5 to 8 percentage points. Results, therefore, suggest that mandatory collective bargaining laws provide a formal mechanism through which public-sector workers are able to bargain for increased compensation. The second chapter examines how state collective bargaining laws affect the distribution of teacher earnings. Using relatively new unconditional quantile regression technique and two nationally representative survey datasets, I show that the OLS estimates found in earlier studies mask substantial heterogeneity in the effects of collective bargaining rights across the wage distribution. My results suggest that collective bargaining rights generally decompress wage distribution among teachers. Analysis using conditional quantile regression, however, suggests that within each pay cell, duty-to-bargain rights lead to level effects on wages. In the third chapter, I examine whether teachers’ unions are associated with misallocation of school district resources by analyzing the effect of teachers’ unions on district financial outcomes and student achievement during the Great Recession. Employing a diff-in-diff-in-diff identification strategy, I find that school districts with strong teachers’ unions experienced significantly larger declines in per-pupil expenditures during the economic downtown compared to otherwise similar districts with weak teachers’ unions. I also find that strong unions protected teacher salaries and the employment of high-paid senior teachers at the cost of laying off younger teachers, which significantly raised average class size. The larger decline in expenditures in strong union districts, however, did not lead to an additional negative effect on students’ academic performance compared to weak union districts. The results support the notion that strong teachers’ unions may possibly lead to inefficiencies in the level of school spending and the allocation of school inputs