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American Economic Review Vol. 116 No. 11 2026

Union Bargaining Power and the Amenity-Wage Trade-Off

Lorenzo Lagos

Brown University, NBER, and IZA (email: )

Abstract

This paper studies how collective bargaining affects wages and amenities. By merging collective bargaining agreements (CBAs) to linked employer-employee data in Brazil, I combine rich contracted amenities with wage information. I implement a difference-in-differences strategy that exploits a court ruling enforcing CBA continuation (i.e., ultra-activity) to estimate the effects of union bargaining power. Strengthening unions raises wages and amenities without reducing employment—increasing retention despite some labor-labor substitution. A revealed-preference approach shows that amenities account for 45 percent of total compensation gains. These findings suggest that collective bargaining can offset monopsony power, but employers retain the right-to-manage workforce composition.

DOI
10.1257/aer.20240766
Volume
116
Issue
11
Pages
4116-4157
Language
en
Sources
crossref openalex openalex

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