Unions and Interindustry Wage Differentials

We investigate the importance of trade unions in collective bargaining in the context of a developing country manufacturing labor market. The methodology we adopt to estimate wage differentials follows the method proposed by Haisken-DeNew, J. P. and Schmidt, C. M. (1997) Review of Economics and Statistics 79, 516–521, since it improves on the standard procedure popularized by Krueger, A. B. and Summers, L. H. (1988) Econometrica 56, 193–259. Our findings indicate that wage dispersion is far greater in the unionized sector of Brazilian manufacturing, in contrast to evidence from other countries.