Effects of Occupational Licensing and Unions on Labour Market Earnings in Canada
| DOI | http://doi.org/10.1111/bjir.12442 |
| Published date | 01 December 2019 |
| Date | 01 December 2019 |
| Author | Tingting Zhang |
British Journal of Industrial Relations doi: 10.1111/bjir.12442
57:4 December 2019 0007–1080 pp. 791–817
Effects of Occupational Licensing
and Unions on Labour Market
Earnings in Canada
Tingting Zhang
Abstract
Using longitudinal data from the Canadian Survey of Labour and Income
Dynamics 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-eects 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 aresignificantly less likely to receive
incentive pay, suchas profit sharing, while the association between occupational
licensing and incentive pay is close to zero and statistically insignificant.
1. Introduction
Unions and occupational licensing are two key labour-market institutions
that aect substantial portions of the workforce. Despite some common
benefits accruing to their members, they cannot easily be equated. Much of
the comparative research focuses on the United States, so we know much
less about the Canadian context. Simply stated, despite similar economic
experiences over the past few decades,labour-market institutions are dierent
in the United States and Canada, and US findings cannot necessarily be
applied to the Canadian situation. The countries show a similar pattern
of declining union membership and rising occupational licensing (for the
Tingting Zhang is at WesternNew England University.
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2018 John Wiley& Sons Ltd.
792 British Journal of Industrial Relations
United States, see Gittleman and Kleiner 2016; Kleiner 2006; Kleiner and
Krueger 2010; for Canada, see panel (b) of Figure 1 in the private sector).
But there is a pronounced dierence in union density, arguably attributable
to the respective countries’ labour-market institutions. In the United States,
the unionized steadily fell from about 28 per cent in the 1960s to 12 per
cent by 2008 (Kleiner and Kruger 2013). It also dropped in Canada, but
less dramatically, now at 30 per cent overall but much lower in the private
sector (15 per cent). Although the legislative and administrative framework
of occupational licensing is similar across countries, it is dicult to apply
US findings to Canada because of the strength of Canadian unions, the
dierent labour lawsand the legislators’ attitudes to granting licensing power
to professional associates, as these influence labour market outcomes (e.g.
Card and Freeman 1993). To shed light on the Canadian context, the
article performs a comparative analysis of unionization and licensing to
illustrate how they separately and/or jointly impact workers’ compensation
packages.
Membership in a union or holding an occupational licence can aect pay,
benefits and well-being. Both generate positive wagepremiums. In the United
States, they increase members’ pay by roughly the same amount — around
15 per cent — although estimates vary considerably (Kleiner and Krueger
2010: 676, 2013: 188). Other countries report similar wage gains for those
with an occupational licence (for China, see Chi et al. 2017; forGer manyand
the UK, see Bol and Weeden 2014; for the EU, see Koumenta and Pagliero
2018; for the UK, see Koumenta et al. 2014). Less is known about Canada,
and the first objective of this article is to provide empirical evidence of the
eects of occupational licensing on wages in the Canadian labour market.
Of course, wages are only part of compensation packages. The US Bureau
of Labor Statistics reports that benefits account for 31.7 per cent of the
compensation costs of American employers.1There is limited evidence on
how occupational licensing and unionization aect compensation packages.
Accordingly, the second aim of this article is to explore how occupational
licensing and unionization aect the provision of employer-provided benefits,
focusing again on the Canadian context.
The article draws on longitudinal data from the Canadian Survey of
Labour and Income Dynamics (SLID) from 1999 to 2011. Looking at a
cross section of respondents and using ordinary least squares(OLS) estimates,
it finds a pay premium of 0.155 log points for those with an occupational
licence compared to those without one, approximately double the union
wage premium, 0.085 log points. In fixed-eects (FE) analysis, however,
the numbers drop considerably, to 0.028 and 0.046 log points for licensing
and unionization, respectively, suggesting the importance of unobservable
factors. The estimated coecients of the interaction between occupational
licensing and unionization are negative but statistically insignificant in
both models, thus failing to support the hypothesis that unionization and
occupational licensing are intertwined and jointly impact wages. In both logit
and multi-level models, occupational licensing has minimal influence on the
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2018 John Wiley& Sons Ltd.
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