Public sector unions and government size

Abstract

Although various studies have concluded that public sector unions raise wages and employment for members, very little research has examined whether public sector unionism influences the overall size of state and local government. The relationship is examined within a pooled data set on all states over selected years during 2003–2010. Wide variation in union membership trends across states provides a rich data set to examine. Empirical results indicate that 10 percentage point increases in public union membership raise several measures of government size within a range of 2.25–4.25%. A similar increase in union membership is estimated to raise annual real wages by $1603 for the average government worker, which amounts to a rise of 3.48%.

Keywords:

• public sector unions
• government size
• public spending
• government workers

JEL Classification:

• J45
• H72