Have unions impeded growing wage dispersion among young workers?

Wage inequality is examined for young males over the period 1980-1993. While wage inequality increased substantially for nonunion workers over this period wage inequality increased only modestly for union workers. In part, this difference results from divergent trends in skill prices - returns to skill rose in the nonunion sector but contracted slightly in the union sector: In particular returns to education increased sharply in the nonunion sector while remaining stagnant in the union sector At least for young workers, these findings suggest that unions have been largely successful in resisting market pressures for greater wage inequality. We also uncover evidence suggesting that, as relative returns to education decline in the union sector; highly educated young workers become less likely to choose union employment.