Does Union Membership Pay Off? Evidence from Organized Indian Manufacturing Industries

The process of global integration deepens the flexibility in labour market and renders collective bargaining increasingly difficult. This study has attempted to analyse the impact of union membership on wages in the organised manufacturing industries in India. The study uses a recent survey data on labour market in the organised manufacturing industries. The estimated wage premium for union membership is 23.5 percent for permanent workers. Decomposing this wage gap indicates that union membership contributes a significant portion of this wage differential, that is, high unionization can lower income inequality among workers. This finding also turns down the free riding problem in the organized manufacturing industries.