This article demonstrates that state collective bargaining laws are important determinants of union and nonunion public employee compensation. State laws that provide stronger bargaining rights and ensure closure to the bargaining process increase the direct effect of police unions on compensation. Moreover, indirect threat effects on the pay of nonunion police also increase with stronger bargaining laws. In each law category investigated, nonunion police receive most of the compensation premium enjoyed by unionized police. Previous studies that have not adequately controlled for these effects of bargaining laws have therefore underestimated the full effect of public-sector unions on compensation.

This study investigates the impact of union organization on the wages and labor practices of establishments newly organized in the 1980s. It uses a research design in which establishments are "paired" with their closest nonunion competitor. It finds that, unionism had only a modest effect on wages in the newly organized plants, which contrasts sharply with the huge union wage impact found in cross-section comparisons of union and nonunion individuals, but unionism substantially alters several personnel practices, creating grievance systems, greater seniority protection, and job bidding and posting. That newly organized establishments adopt union working conditions but grant only modest wage increases suggests that "collective voice" rather than monopoly wage gains is the key to understanding new unionism.

We augment standard log earnings equations for workers in US manufacturing with variables reflecting measured and unmeasured attributes of their employer. Using panel employee-establishment data, we find that establishment-level employment, education of coworkers, capital equipment per worker, and firm-level R&D intensity affects earnings substantially. Unobserved characteristics of employers captured by employer fixed effects also contribute to the variance of log earnings, although less than unobserved characteristics of individuals captured by individual fixed effects. The observed and unobserved measures of employers mediate the effects of individual characteristics on earnings and increase earnings inequality through sorting of workers among establishments.