We explore the relationship between union membership rates and labor shares using panel
data on 35 industries, spanning the entire US economy, for the years 1983–2005. For the full
sample, a standard deviation increase in union membership rates is associated with an increase
in an industry’s labor share of about 10%. Starting from the mean labor share in our sample
(0.614), this effect amounts to about 6 percentage points. However, the effect is weaker and
not statistically significant for manufacturing industries. We control for the capital-to-output
ratio in all of our estimations, and the results are consistent with an elasticity of substitution
between capital and labor that is less than unity. As such, the positive union effect on labor
share is consistent with either the right-to-manage or the efficiency bargaining model of
unions.

• Do Unions Increase Labor Shares? Evidence from US Industry-Level DataDo Unions Increase Labor Shares? Evidence from US Industry-Level Data