An Empirical Analysis of the Union Wage Effect in China: An Examination Using Panel Data

Abstract

This article empirically examined whether Chinese trade unions (gong hui) have wage effects using the CFPS dataset under the situation that unionsʼ presentative functions in collective industrial relations are questionable. This article took two problems into consideration—the estimation bias caused by unobserved heterogeneity and the endogenous problem brought by self-selection bias. The results indicate that Chinese trade unions have wage effects that could boost the protection of laborersʼ interests. This study reveals that the wage effects are more significant for workers who join self-owned companies or hold rural household registration. On the other hand, the limitations of unionsʼ function are also confirmed. Specifically, workers who joined self-owned companies and workers born in rural areas have lower trade union participation rates. Therefore, they lack formal channels to raise a complaint. Thus, this article implies that improving Chinese trade unions will be an essential issue for the future, including strengthening the implementation of a policy called ʻtrade union membership administrative measuresʼ and enhancing the unionsʼ function in expanding the applicable scope of the labor-management negotiation system.